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Classic Car Market Shows More Growth Than Hedge Funds

Motor Trend logo Motor Trend 7/7/2016 Conner Golden
1957 ferrari 250 testa rossa front three quarters1 © Provided by MotorTrend 1957 ferrari 250 testa rossa front three quarters1

Confirming what many of us usually joke about, a new report from the Financial Times reveals the values of significant vintage and collector cars have handily outperformed a number of top global hedge fund managers "over the past decade."

FT cites a study from the Knight Frank Luxury Investment Index, outlining the meteoric rise of collector cars over the past 10 years. Apparently, if you bought into the marketa decadeago, you might have seen a return of 161 percent after five years, and a whopping 467 percent after 10. Not convinced? Average hedge funds returned 4.75 percent and 7.83 percent over five and 10 years. If you shrink that down to a one-year span, the growth figure drops to a 17-percent increase, whereas hedge funds saw a decrease of 2 percent.

1963 Porsche 356 B 2000 GS Carrera 2 Coupe © Provided by MotorTrend 1963 Porsche 356 B 2000 GS Carrera 2 Coupe

Before you rush out and plunk down hard cash on that rusted-out Beetle down the street, it's important that those interested in sinking significant chunks of money in the collector car market realize these growth percentages primarily represent sales of investment-grade vehicles. While you might see the value of a 1965 Ford Mustang raise slightly, you are much more likely to make large profits on cars that are well into the six- and seven-figure range.

As a result of this market rise, there is a noticeable surge in supply as well, and many more collectors are willing to offer up their valuable assets than ever before. This results in an uncertain future for the market, as investors might slowly back out as values gradually dip down.

"If you think that you will buy a Ferrari and it will double or triple in price over the next two or three years, I'm not sure that would be the best advice," Fritz Kaiser, executive chairman of a wealth management firm told FT. " But if you are a collector, then now is a good time to buy."

Source: Financial Times


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