Classic cars outperform global stocks

If investors feel a little worn out by the rock-and-roll ride in financial markets, then "passion" investments like classic cars and fine art may be worth a second look.

The value of classic cars increased by 40 percent in 2014 on the previous year and by nearly 400 percent when compared with 2005, according to an index published by U.K. private bank Coutts on Tuesday.

Attendees look at a 1955 Daimler AG Mercedes-Benz 300 SL Gullwing during the 2015 Pebble Beach Concours d'Elegance in California, U.S.
David Paul Morris I Bloomberg via Getty Images

The appreciation in classic cars—classified by Coutts as those that have been auctioned for more than $500,000 and have been sold more than 10 times—dwarves that of U.S. stocks, which put in a strong performance in 2014.

The benchmark U.S. gained 11.4 percent last year, while the narrower Dow Jones industrial average rose 7.5 percent and the Nasdaq Composite gained 13.4 percent.

Coutts, which is known for holding the account of U.K. Queen Elizabeth, published its "passion investment" index on Tuesday, which tracks the appreciation of some of the most popular and valuable collectibles.

While cars came out easily the winner among passion investments, other strong performers included "Old Master" and 19th century art and coins, which gained 10.7 percent and 9.3 percent respectively in 2014. Other assets in the index included watches, fine wine, stamps and jewelry.

"At a time of paltry interest rates, we continue to see lots of interest from the wealthy in finding somewhere worthwhile and out of the ordinary to put their money," head of financial advice and investment solutions at Coutts, Mohammad Kamal Syed, said in a news release.

"Passion assets maintain their appeal, indeed the majority of passion assets we've tracked have risen over the past 12 months. Aside from the returns, these assets can bring a sense of excitement and the thrill of acquisition is a clear motivation for lots of collectors."

The 1934 Packard 1108 Twelve Dietrich Convertible Victoria, took the “Best of Show Award” at the Pebble Beach Concours d’Elegance in Pebble Beach, Calif., on Sunday, Aug. 18, 2013.
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Overall, the passion investment index increased by only 0.8 percent during 2014, although it was up 80 percent in local currency terms since 2005.

Even cars' outperformance was outstripped by some equity indexes. China's Shenzen CSI 300 index, for instance, ended 2014 with gains of near 52 percent, ahead of its more recent slump. Another rocky equity performer, Argentina's benchmark Merval, added 59 percent in 2014.

And for some luxury investments, 2014 was a tough year. Fine watches were the worst performer, falling 17 percent in value, while fine wine dropped 9.4 percent.

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Luxury real estate returns were also muted, with leisure properties actually falling in value.

"Despite some of the headlines regarding super-prime real estate market, 2014 was actually an unremarkable year for Trophy Properties – divided into residential properties (luxury properties in ten prime global city locations) and leisure properties (in the world's most desirable leisure destinations), with the former virtually unchanged and the latter falling by 2 percent," said the bank.

"This is against a backdrop of double digit increases before the 2008 financial crisis."

Coutts Index—'Passion' gains across 2014

  • Watches: -17.6%
  • Traditional Chinese Works: -13.3%
  • Fine Wine: -9.4%
  • Billionaire Trophy Properties: -2.2%
  • Stamps: 0
  • Leisure Properties: +0.1%
  • Impressionist & Modern Art: +1.0%
  • Rugs & Carpets: +1.3%
  • Jewelery: +1.9%
  • Post War & Contemporary Art: +3.4%
  • Rare Musical Instruments: +5.5%
  • Coins: +9.3%
  • Old Master & 19th Century Art: +10.7%
  • Classic cars: +40%