Millionaires in the UAE, Saudi Arabia and China are the world’s biggest hoarders of so-called ‘treasure assets’, with holdings of precious jewellery, art and wine, constituting nearly a fifth of their total net worth.

Millionaires in the UAE, Saudi Arabia and China are the world’s biggest hoarders of so-called ‘treasure assets’, with holdings of precious jewellery, art and wine, constituting nearly a fifth of their total net worth, according to a new survey.

High net worth individuals in the UAE hold an average of 18 per cent of their net worth in treasure, Saudia Arabia and China are each at 17 per cent, according to the report entitled, Profit or Pleasure? Exploring the Motivations Behind Treasure Trends, from Barclays. Two thousand wealthy respondents were surveyed globally.

Singaporean HNWIs hold on average 16 per cent of their total net worth in treasure assets, and wealthy Hong Kongers have 14 per cent. On the other hand, Qatar and India hold more conservative levels of their total wealth in treasure, at 2 per cent and 3 per cent respectively. Japanese HNW individuals have 9 per cent.

Despite the increased public interest in collectibles and record prices being set at auctions, the report finds that investors are far more likely to buy treasure assets for emotional, rather than financial reasons.  The top motivating factors for purchase include enjoyment, showing them off to others and protecting treasure assets so that they can be enjoyed by their future generations.

In Asia, collectors are more financially motivated. Thirty six per cent of treasure assets are held for financial motivations across the Asia region compared to 19 per cent globally, according to the latest report in the Wealth Insights series from Barclays.

Thelma Kwan, head of wealth advisory at Barclays in Asia-Pacific, said: “There will always be both an emotional and a financial component to the decision making process, but, given some of the difficulties associated with maintaining, securing and liquidating treasure assets, our study suggests that it is passion that is more important than investment. Treasure may, if you’re lucky or very knowledgeable, give you a financial return, but buying something you enjoy will always give you an emotional return.”

Treasure as an Heirloom

Surprisingly, Hong Kong’s HNWIs have plans to pass just 25 per cent of their treasure to the next generation, ranking third from the bottom globally. This is as compared to other Asian markets like India (67 per cent) and China (52 per cent).

Kwan said: “From an emotional perspective, inheritors are less attached to these treasure assets and may prefer monetising them and channelling the proceeds to another asset class. The tendency for wealthy individuals to sell their treasure upon inheritance highlights the importance for individuals to plan carefully when bequeathing treasure to their dependents. As part of their estate planning, discussions should include their plans for the inter-generational transfer of treasure, and the interest and desire from the next generation in receiving these items.”

Treasure Trends

Precious jewellery is the most popular treasure asset type for wealthy individuals across most countries, with 70 per cent of respondents investing in this asset, followed by fine art (49 per cent) and antiques (37 per cent).

A third of the respondents globally confirmed that they were holding more treasure types today than five years ago. A number of different factors appear to affect the popularity of treasure asset types, from the age of the investor to the wider economic stability of their region.

Amongst global respondents, age is an important differentiator. Fine art and antiques tend to be more popular amongst older individuals, while the younger generation prefers cars, wine, precious metals and jewellery. In general, younger individuals also tend to hold a higher proportion of their total wealth in treasure assets, which experts have attributed in part to young people’s willingness to adopt higher-risk investment strategies.

Kwan said: “Whilst the type of treasure assets people choose to invest in varies slightly from country to country, the growth in the popularity of treasure is consistent with a general move towards simplicity, familiarity and tangibility in investing. Investing in assets as a like-for-like alternative to traditional asset classes should, however, be done with extreme caution as there are many attendant risks which range from the costs of insurance and upkeep of treasure to the subjective nature of these markets.”