What was meant to be a quick sale of a rare antique turned into a sobering reminder of the hidden risks of so-called alternative assets.
Grande tête mince, a bronze sculpture by Swiss surealist Alberto Giacometti, failed to meet expectations at a recent Sotheby’s auction. Industry insiders and art experts estimated that the sculpture was worth US$70 million, however the auction failed after the highest bid maxed out at US$64.25 million, according to the New York Times.
This high-profile flop highlights some of the risks of investing in alternative assets such as art and collectibles. According to Deloitte ultrawealthy families across the world have allocated roughly 13.4% of their assets to artwork and collectibles, on average. Unfortunately, the art and collectible market is a tough asset to store wealth. These markets are notoriously opaque and illiquid, meaning many of these collectibles cannot fetch the high resale price that owners expect.
Investors looking to diversify using alternative assets don’t need to rely on an illiquid asset, such as fine art. Instead, consider these three alternative assets that can offer more attractive investment returns than ancient sculptures or oil on canvas.
Alternative asset #1: Gold
Gold has been around longer than any piece of ancient art and its collectors include central banks and sovereign nations. The market for this precious metal is also much more transparent and robust.
Gold’s reputation as an uncorrelated, safe haven is well known among investors — and the reliance on the market to gravitate to this precious metal has only been cemented in recent months. As President Donald Trump’s ongoing trade war whips up volatility in stocks, bonds and cryptocurrencies, the price of gold has surged roughly 25% over the past six months.
For investors, adding exposure to precious metals is a good idea, particularly if you’re worried about economic growth, inflation or interest rate volatility over the medium- to long-term.
Alternative asset #2: Real estate
Tangible land and property have strikingly different dynamics when compared to stocks or bonds. According to an analysis by J.P. Morgan , direct real estate as an asset class tends to have low or even negative correlation with the S&P 500 (SNP:GSPC) — the index fund commonly used to track the overall health of the North American stock market.
To be clear, J.P. Morgan focused on direct real estate deals. An analysis by Guggenheim Investments found that real estate investment trusts (REITs) had higher correlation with the S&P 500 (SNP:GSPC) — meaning if you’re a homeowner or landlord with real property holdings, your property’s value tends to rise and fall in relation to the health of the equities market. However, with real property the benefit is the inflation-hedged cash flow you earn from rent.
For investors considering a real property rental it’s important to understand the financial obligations and tax ramifications of purchasing a rental property. For investors looking for real estate exposure without the headache of being a landlord, opt for shares in REITs.
Alternative asset ##: Infrastructure
Infrastructure assets such as toll roads, bridges, cell phone towers and airports have many of the same dynamics as real estate. However, these assets are more rare and could have great earnings potential.
Private infrastructure assets across the world performed better than stocks and bonds in 2022, when inflation and interest rates were rapidly rising, according to KKR. That makes these assets an ideal “shock absorber” for a typical investor’s portfolio.
If you’re looking to add some exposure to this niche asset class, consider the iShares U.S. Infrastructure ETF (BTS:IFRA) or the SPDR S&P Global Infrastructure ETF. If you’d prefer not to risk currency exchange fees and withholding tax, consider Canadian stock options such as Bird Construction (TOR:BDT.TO), WSP Global (TOR:WSP.TO) and Badger Infrastructure Solutions (TOR: BDGI.TO).
Pipelines and cell towers might not be as exciting as rare exotic artwork, but the necessity of these infrastructure projects usually translates into a more lucrative asset that is typically less volatile.
Sources
1. The New York Times: Anatomy of a $70 Million Auction Flop, by Tim F. Schneider (May 14, 2025)
2. Deloitte: A snapshot of the last Deloitte Private and ArtTactic Art & Finance Report (Feb 8, 2024)
3. J.P. Morgan: Direct Real Estate: Finding diversification and stable income, by Meera Pandit (Apr 1, 2025)
4. Guggenheim Investments: Asset Class Correlation Map
5. KKR: Infrastructure: A Potential Economic Shock Absorber, by Brandon A. Freiman and Derek Craig (Jan 2024)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
