Collectibles:

Vintage assets like stamps, old wines, artworks, old cars etc are known as collectible assets.
These are highly valuable as investors understand the profitability of the collectibles to be
invested on. Most collectibles yield high financial returns, but posses very high risk as
compared to investing in stocks [1]. Also, economic disruptions like the COVID-19 pandemic
can have a huge impact on the collector’s market[2]. The prices of collectible assets are
driven mostly, by scarcity and investor emotions [3]. The following motives best describe
the investor’s willingness to invest into collectibles. They are, social acceptability, culture,
harmony, aesthetics, pleasure identification and group identification [4].

Financial performance and Findings on collectible investments:

As discussed earlier, the long-term rate of return on investing in collectibles is high than that
of investing in stocks, there are many risk involved for the same. Dimson et al.[5] analysed 3
common collectible assets, which include stamps, art and musical instruments. And found
out that long-term returns on these assets were higher than that of returns obtained from
government bonds.

Lucińska et al.[6] analysed the factors influencing price fluctuations on artwork assets in the
Polish art market. From this, it was found that, factors like the subject of the art, age, size
and artist reputation, were the determinants of the price of the art.
Intangible investments:
These type of investments are made in those assets which cannot be felt, seen or checked.
Their valuation is purely based upon the performance of the market. Intangible investments
rose rapidly since the late 1990s, due to development in the information and
communication technology sector[6].The types of intangible investment vehicles include:

 Hedge funds
 Private Equity
 Venture Capital
 Cryptocurrency

Hedge funds:
These are the alternative investment vehicles which caters to the investors who meet the
high-minimum investment requirements. Hedge funds have become increasingly popular
since the 1990s [7]. They have one aspect that sets it apart from other asset classes is their
high liquidity. They can get sold out in minutes due to increased presence in liquid
securities. There are 4 different types of hedge funds, namely [8]:

 Global macro hedge funds are actively managed investment vehicles that aim to
make money from significant market fluctuations brought on by political or
economic events.
 An equity hedge fund may invest in profitable stocks globally or only in a single
nation, protecting itself against equity market declines by selling short expensive
equities or stock indices.
 A relative value hedge fund looks to take advantage of short-term price or spread
inefficiencies to profit from disparities in the prices of comparable securities.
  An activist hedge fund invests in firms with the intention of raising the stock price by
demanding that expenses be reduced, assets be reorganised, or the board of
directors be replaced.

Hedge Fund Strategies:

Hedge fund strategies use a wide range of investments, including debt and equity securities,
commodities, currencies, derivatives, and real estate, to cover a wide range of risk appetites
and investment philosophies. Common hedge fund strategies include equity, fixed-income,
and event-driven goals and are categorised based on the manager's preferred method of
investing. In a long/short hedge fund approach, investors go long and short on two rival
companies in the same industry based on their relative values. Pairs trading is a variation of
this strategy. A fixed-income hedge fund strategy seeks for capital preservation while
providing investors with stable returns with little monthly volatility by holding both long and
short positions in fixed-income assets. A method used by event-driven hedge funds
capitalises on momentary stock mispricing brought on by corporate happenings.
Hedge Funds vs Mutual Funds:
Hedge funds are distinct from mutual funds, and they are not subject to the Securities and
Exchange Commission's stricter regulation than mutual funds are. Mutual funds, which are
accessible to the general public and average investor, are a practical and cost-effective
solution to create a diversified portfolio of stocks, bonds, or short-term investments. Only
accredited investors—those with an annual income above $200,000 or a net worth
surpassing $1 million, minus their primary residence—can contribute money to hedge
funds. These investors are thought to be capable of managing the possible risks that hedge
funds are allowed to incur. While mutual funds utilise stocks or bonds as their instruments
for long-term investment plans, hedge funds can invest in real estate, stocks, derivatives,
and currencies. Hedge funds often restrict possibilities to redeem shares and frequently
impose a locked period of one year before shares can be paid in, in contrast to mutual funds
where an investor can choose to sell shares at any time. The 2% management fee and 20%
performance fee structure is used by hedge funds. For the typical investor, the expense
ratio for all mutual funds and exchange-traded funds in 2021 was 0.40%.

Comparing Hedge Funds to Other Investments:

Mutual funds, exchange-traded funds (ETFs), and hedge funds are all collections of money
donated by numerous investors with the goal of making money for both themselves and
their clients. Hedge funds are actively managed by professionals that buy and sell specific
investments with the declared goal of outperforming market returns or the returns of a
particular market sector or index. Hedge funds seek the highest possible profits while taking
the biggest risks to do so. They are less strictly regulated than similar products and have the
freedom to invest in esoteric investments like options and derivatives that mutual funds
cannot.

References:
1. https://www.researchgate.net/publication/
4981606_Measuring_Returns_on_Investment_in_Collectibles
2. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwj1h--
7-sX5AhXbmlYBHbM4BGcQFnoECAgQAQ&url=https%3A%2F%2Fwww.credit-suisse.com
%2Fmedia%2Fassets%2Fcorporate%2Fdocs%2Fabout-us%2Fresearch%2Fpublications
%2Fcsri-collectibles-2020.pdf&usg=AOvVaw3PDN_jjueLp_fhANfJBWD1
3. https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwj1h--
7-sX5AhXbmlYBHbM4BGcQFnoECEIQAQ&url=http%3A%2F%2Ffms-kursk.ru%2Fwp-content
%2Fuploads
%2F2019%2F05%2F316121Walgreenma.pdf&usg=AOvVaw2lyNb2PqoUfSTfwLJ1YuUJ
4. https://www.researchgate.net/publication/
266244089_Motives_For_Purchasing_Artwork_Collectibles_And_Antiques
5. https://www.tandfonline.com/doi/full/10.2469/faj.v70.n2.8
6. https://onlinelibrary.wiley.com/doi/full/10.1111/j.1475-4991.2009.00345.x
 7. https://www.tandfonline.com/doi/abs/10.2469/faj.v61.n6.2775
8. https://www.investopedia.com/terms/h/hedgefund.asp

Picture Refs:

1. https://www.barrons.com/articles/collectible-watches-and-fine-wine-ranked-best-
performing-luxury-assets-01646086706
2. https://www.linkedin.com/pulse/collectibles-personal-use-assets-soundera-pandian-
selvaraj?trk=read_related_article-card_title
3. https://www.wallstreetmojo.com/what-is-hedge-fund/
4. https://www.google.com/imgres?imgurl=https%3A%2F%2Fcdn.wallstreetmojo.com%2Fwp-
content%2Fuploads%2F2015%2F09%2FHedge-Fund-Strategies-1.jpg&imgrefurl=https%3A
%2F%2Fwww.wallstreetmojo.com%2Fhedge-fund-strategies
%2F&tbnid=7WKos98rqTQyzM&vet=12ahUKEwj6vqu-
o8b5AhWIyXMBHVRpCqcQMygAegUIARDYAQ..i&docid=5chM28VC4TeMZM&w=815&h=473
&q=hedge%20fund%20strategies&ved=2ahUKEwj6vqu-
o8b5AhWIyXMBHVRpCqcQMygAegUIARDYAQ