What if that Manet, Babe Ruth home run ball or holographic Charizard Pokémon card were as easy to invest in as SPY?
While collectibles are technically assets, most financial professionals would agree they shouldn’t be treated as traditional investments. Fine art, vintage wine, classic cars and comic books are better viewed as passions than the foundation of a portfolio. But as ETFs continue to evolve, the industry may not be far from packaging paintings, memorabilia and other collectibles in the wrapper.
At a recent ETFGI conference in New York, a panel of industry executives said ETFs might be only a few years away from tracking collectibles, with one saying his firm had even considered the idea of a Pokémon card fund.
Try feeding it some rare candy.
Collect Them All
An ETF investing in specific Pokémon cards or other collectibles may sound outlandish, but plenty of mainstream assets were once considered unconventional. Gold investors used to be called “bugs” and bitcoin was largely viewed as a fringe tech bet. But now, it’s not shocking to see SPDR Gold Trust (GLD) or iShares Bitcoin Trust ETF (IBIT) in advised portfolios.
The demand for art and collectibles is there, said Matthew Newton, head of art advisory at UBS. The problem is creating products that are functional and liquid; that’s why ETFs that hold private equity and credit are required to be majority invested in public assets. An original Picasso may be stunning, but it won’t trade nearly as easily as Apple stock. “Chances are transactions aren’t going to happen in under 24 hours,” Newton told Advisor Upside. “Where it takes the art world a full year to transact $60 billion, the S&P 500 companies do that before lunch.”
The Commerce Comet. Companies such as Rally and Masterworks already allow investors to buy fractional interests in collectibles. Putting those assets into ETFs, however, could make them significantly more approachable.
“Most people want their investments accessible in a brokerage account,” said Eric Balchunas, senior analyst at Bloomberg Intelligence. “That’s a very underrated part of ETFs: They take a bunch of stuff that’s a pain in the butt to get and make it trade like equities.”
Balchunas said he wouldn’t be surprised if collectibles eventually make their way into the ETF wrapper. “I frequently joke that an issuer could put Mickey Mantle rookie cards in an ETF, and it would find a price,” he said. Still, he expects the assets to remain a niche corner of the ETF market. “Even if they’re a hit, it will be relatively small compared to the big globs of money going elsewhere.”
