Wine, art, jewellery and pop memorabilia are more than just Christmas presents according to experts in the alternative investments arena, who say that disillusioned investors are turning to exotic assets for returns.
More and more investors are moving away from traditional asset classes to the art market, in an attempt to find real assets according to Constanze Kubern, senior art adviser at Castlestone's Collection of Modern Art Fund.
Castlestone's Collection of Modern Art Fund, available to investors with a minimum investment of £10,000, invests in a range of post-war art, including works by Andy Warhol, Roy Lichtenstein, Pablo Picasso and Francis Bacon.
Bernard Duffy, managing director of Emotional Assets Management and Research (EAMR), said this type of fund were becoming increasingly popular.
"In recent years we have seen the rise of the 'investor collector'," he said.
"They have been looking to diversify their portfolio in order to get better returns, as well as keeping a close eye on investment value. With tangible assets like a Picasso painting, you can do this."
He added: "Investors have lost confidence in traditional assets at the moment, and I don't think that is going to change. They have become disillusioned with poor returns from bonds and equities."
Wine is also growing in popularity, and not just on the streets of your local binge drinking town. Andrew della Casa, director of the Wine Investment Fund – also available to investors with £10,000 to spare – said: "The most expensive wine we have on our books is probably the Chateau Lafite 2000. We bought this wine for £8,250 per case in November 2008. It is valued at over £20,357 today.
"If you are a private European investor, you would probably pay close to £22,000 today, although a Far Eastern investor would be prepared to pay a lot more - a case sold for £45,000 at auction in Hong Kong recently at the end of October."
Della Casa added: "Fine wine is proving its worth as an investment and we are seeing more professional investors using it as a valuable diversification tool within a properly managed investment portfolio. Most of our investors reinvest their payouts in a new tranche or just take their profit element and reinvest the original capital.
"It has some very useful characteristics which investors are looking to exploit, including a low volatility relative to equities, gold and oil."
The Wine Investment Fund predominantly invests in Bordeaux Cru Classe wine and investment grade wine in general. In 2008, the fund outperformed the FTSE 100 by 26 per cent and its benchmark index, the Liv-ex wine index, by 10 per cent.
Luxury brands continue to produce returns despite the recession according to Scilla Huang Sun (pictured right), manager of the Julius Baer Luxury Brands Fund. She says: "Luxury stocks have performed well this year, and will continue to do so."
LVMH, Swatch, Richemont, Tiffany and Coach feature in the fund's top five holdings. Thirty five per cent of the fund is invested in fashion and accessories, seven per cent in cosmetics, twenty per cent in jewellery and watches, twelve per cent in shoes, five per cent in leisure, and three per cent in cash.
Over the year-to-date the Julius Baer Luxury Brands Fund rose 40 per cent while the MSCI World Index (EUR) rose 13 per cent.