More and more platforms emerge for fractional investment in collectibles

More and more platforms emerge for fractional investment in collectibles

You can finally own the most expensive memorabilia of your dreams… or, at least, a fraction of it.

Platforms to invest in collectibles as a shareholder have been multiplying and gaining popularity across the world, making it easier than ever for investors to capitalize on the surge in collectible assets’ value in recent years. 

There are many online marketplaces where anyone can buy or trade shares in high-appreciation, rare items – from trading cards to luxury cars and artworks. But what is driving this trend, and why should you consider investing in collectibles using fractional ownership? 

Let’s take a look at some of the most popular fractional investment platforms out there, and see why now may be the right time to get into the collectibles market. 

What makes a collectible an asset?

The reason collectibles make for such a valuable asset is the same reason you would keep an heirloom, or maintain a vintage item from several decades ago – it’s the emotional and rarity value collectors have for an item that turns it into a financial asset for investors. 

The recent surge in the value of trading cards shows just how lucrative collectibles can be as an investment. 

How fractional investment makes collectible assets accessible

While it is true that the rarest collectibles come at a high price, it doesn’t have to mean that it’s impossible for the everyday person to capitalize on their high appreciation potential. 

This is where fractional ownership comes into play. With fractional investments, you can own a few (or many) shares in luxury items and rare collectibles that might be worth millions of dollars. The price of a single share might be only in the tens of dollars, allowing you to trade collectibles the same way you might trade stocks. 

Fractional ownership was actually inspired by stock trading, and recently there’s been accelerated growth in the number and popularity of platforms which exist to facilitate the trade of shares in collectibles. 

Some of the best-known fractional investment platforms include:

  • Rally RD
  • Otis
  • Collectable
  • Masterworks

Benefits of fractional ownership

The main benefits of fractional ownership (versus full ownership) of collectibles include: 

  • Accessibility: High-value asset investments, which once were reserved only for the rich, can now be accessed by the general public. 
  • No maintenance: Luxury items increase in value over time, as long as they’re properly maintained. With fractional ownership, investors now have the chance to own a stake in an Andy Warhol, or even a Lamborghini, without worrying about the worry or expense associated with maintaining high-value assets like these (and you don’t have to pay for storage). 
  • Diversification: You can spread your investments across multiple types of assets to mitigate risk, rather than invest a large sum of money in a single collectible. 
  • Flexibility: Shares can be liquidated quickly and much more easily than with the sale of a physical item. Plus, you can own collectibles remotely, from anywhere in the world.

With the number of reliable industry sites that now cater to trading shares in collectibles, it’s also never been easier to engage in fractional investments. 

How do fractional ownership platforms work?

Just like stocks, where most of us require the help of professional traders to make better decisions, investing in collectibles is typically led by specialist investment firms, which list their available shares for sales on the various fractional ownership platforms. 

This is how the process usually works:

  • A firm sources rare blue-chip collectibles from original owners who may choose to retain up to 50% of the total shares.  The platform itself normally takes a 5% equity stake in the offering.
  • The details of a specific offering are listed on a fractional trading platform, complete with unit price and the number of shares available. 
  • Once all the shares of the primary offering have been sold, the investors can sell their shares once secondary trading starts in 90 days and realize the profit from asset value appreciation.
  • Depending on the firm, the item can sometimes be stored in a secured location, which also acts as a museum for shareholders who want to view the physical items they’ve invested in.

For example, Collectable is currently selling shares in one of only two 1953 Topps cards in existence of a Mickey Mantle graded PSA 10 Gem Mint.  The card is valued at $2.5 million, with the cost per share fixed at $25. There will be 40,000 available shares for the public to buy, in total. 

After an investor buys the shares, there is a 90-day lockup period, once the item has been fully funded. Then, once it reaches its shareholder quota, the item will usually be put up for auction, a process which raises the price and multiplies the ROI investors make.

Fractional ownership platforms: making collectible investments simple

In the past, investing in high-value assets seemed like an unattainable strategy for most, but with the rise of platforms like Collectable and Masterworks, there’s now an opportunity for everybody to get a piece of the pie. 

References:

https://medium.com/@etiennebr/a-new-trend-in-consumer-finance-fractional-investment-is-coming-to-community-led-real-world-assets-303b6d1a1683

https://antiquesandauctionnews.net/articles/Should-You-Own-A-Fractional-Share-Of-A-Rare-Collectible%3F/

https://www.bloomberg.com/news/articles/2020-02-07/you-can-own-a-fraction-of-a-warhol-but-should-you

https://withotis.com/

https://www.cnet.com/news/pokemon-card-sells-for-60000-gets-lost-in-the-mail/#:~:text=The%20buyer%20is%20offering%20%241%2C000,where%20his%20card%20could%20be.&text=%22Recently%20one%20of%20the%20most,aficionado%2C%20in%20a%20video%20Tuesday.

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