Luxury Collectibles Are Seen as Stores of Value, From Bags to Diamonds

It was the reelection of Donald Trump that sparked an idea for Dana Auslander, a Black-stone alumna. “I knew we were in for a volatility shit show,” the 50-something New Yorker says, keenly aware that wealth-preserving assets like gold were likely to thrive in an unpredictable environment. (Indeed, prices per troy ounce were up about 70 percent within a year of his return to office.) Could she replicate that kind of upside through an entirely different commodity? The answer, she decided, was sitting in a boutique on Madison Avenue.

Auslander has been a loyal Hermès customer for two decades. Over that span, she has watched as the brand’s most coveted bags—Birkin or otherwise—have become harder and harder for buyers to acquire. With a tightening supply, the company’s stock soared, climbing from 53 euros (about $63) in 2004 to roughly 2,300 euros ($2,736) in late 2024, an increase of around 3,550 percent. Auslander reasoned she could help investors profit from that momentum in an entirely new way, and the result was her wealth-tech start-up, Luxus.

She launched in 2021 with Fund 1. It took $1 million from accredited investors, with a minimum buy-in of $100,000, and used the capital to acquire Birkin and Kelly bags on the secondary market. Over a 15-month period, the fund would continuously exit those bags to buyers at a premium, aiming to deliver a healthy return. As of this writing, Fund 1 had sold 46 of 56 bags, mostly via partners such as Sotheby’s Buy Now, the RealReal, and eBay. Auslander proudly touts a 44.9 percent net R.O.I. “That’s way better than anything else,” she says.

Luxus isn’t the only entrant in this alternative-asset niche, one that focuses on transforming occasional indulgences to something closer to a treasury bond. Berlin-based Konvi, for example, offers retail investors fractional stakes in high-value alternative assets, from whiskey to classic cars. The five-year-old firm relies on a manager to exit a given item after a holding period, for a significant return on those investments.

Retired N.F.L. safety Gerome Sapp built Rares, a platform aimed at so-called social investing and predicated on collectible sneakers. Sapp and his team helped set a record for the most expensive hammer price for a pair when they bought the Air Yeezy 1 Prototypes worn by Kanye West at the 2008 Grammy Awards for $1.8 million at Sotheby’s in 2021.

Yes, a Patek Philippe is a nice piece to hand down, and it’s a nice piece to own, but it’s a game. It’s a hobby… It’s not a strategy.

Dominic Khoo, an Antiquorum alum, turned his own timepiece obsession into a similar concept, the Watch Fund, inviting investors to bet that the soaring prices of Rolex and its peers could outperform the FANGs (Facebook, Amazon, Netflix, Google). Think of them as “investor consumers,” says Niki McMorrough, a marketing expert who runs consultancy firm Affluent Audiences. The wealthiest buyers, she says, increasingly view high-end goods as another place to park capital. “Everything they buy is an asset. It’s all an investment, to either keep as an heirloom or sell in the future for an appreciated value.”

Auslander is betting her business on that shift in mindset. She has already launched and closed a second $2 million fund and plans to roll out localized funds around the world, especially in the Middle East and Asia. Of course, her business model effectively turns a fund into a retailer with one or two in-demand products. “We’re disrupting the resale industry,” she says. 

She points to the pandemic-era spike in Birkin pricing as the moment many dealers reset expectations. “Everyone paid whatever they wanted to, and resellers don’t want to let go of that party—they’re still charging a massive markup,” she notes. “We only care about sales velocity… and churn.” Many resellers also took on heavy venture debt in that period, hoping to scale. Cash-flow constraints now leave them unable to acquire goods outright, forcing a consignment model that hobbles their ability to set prices. Auslander has neither of those problems. Put simply, she can undercut the existing secondary market and capture share.

She acknowledges that Luxus is just as vulnerable to counterfeiting as its rivals, since all merchandise is acquired on the secondary market. She claims that using smaller resellers to help with both acquisition and sales allows the company to rely on those experts’ own networks—and need to protect their reputations. “As they sell these bags directly to consumers, they have every incentive to be rigorous: Counterfeit goods represent a direct threat to their own businesses and reputations,” Auslander says of this safety-in-numbers approach. Luxus also audits its inventory every quarter using its own structured checklist, which it believes adds a secondary layer of verification, albeit another subjective one.

Auslander plans to expand beyond bags next year, likely into watches, though she has no interest in courting retail investors. “I don’t want it to be too big or commoditized and ruin the returns—we’ll keep it small because the investors are a club.” One perk: Investors can buy one of the fund’s bags fee-free at entry-level prices.

Rayah Levy’s FCD Invest operates on a similar logic. An early entrepreneur in the commoditized art market, 44-year-old Levy claims she established the world’s first art fund in 2003 in Australia, where laws allow investors to use 401(k)–style funds to buy art. “I went through two recessions,” she says of her pivot away from that category. “I’d said for 15 years that art was the strongest form of commerce in recorded human history—and it turned out… it was a speculative investment.”

Levy is much more confident in the long-term stability, and upside, of her newest focus: colored diamonds. Their scarcity makes them an irresistible investment, Levy argues, and she believes that within the next four decades, all known colored-diamond mines in the world will be tapped out and closed. She points to the mothballing of Australia’s Argyle in 2020. Banks are preparing to recognize colored diamonds as an asset class, she says, noting that stones already receive similar treatment in law. When jewelry is set, it’s personal property, but as Levy points out, “If it’s a loose, polished stone, it’s considered a commodity, and it’s taxed completely differently.”

Consulting with accountants and lawyers, FCD works by partnering with asset-management firms to build a strategy. Levy then buys a diamond or two and holds it for as long as it makes sense. One client came to her after advisers suggested he diversify his portfolio into hard assets: a financier in his 40s with a young family and generational wealth (“the type of person who’s on the list everywhere,” she says). He deposited $2.5 million in an escrow account that he was willing to invest with her. Four years later, he exited at $6 million.

With hard assets like this, unlike stocks, there’s built-in overhead—mainly insurance and storage in commercial-grade vaults. Tax rules can make those expenses deductible, Levy adds. One thing that doesn’t dazzle her? The stones themselves. “I have never worn diamonds, but I do store them,” she says.

Despite the large sums involved, colored-diamond trading remains a fledgling business, with limited analysis on values and market scope beyond the Fancy Color Research Foundation, whose work focuses on stones of one carat or larger. Smaller colored gems—especially vivid greens, blues, or reds—can be immensely valuable. “So how am I the only person in diamonds and finance?” she asks.

Levy likely won’t be alone for long. Liam Bailey, global head of Knight Frank’s research department, which puts together its yearly Wealth Report, says that collectibles became a formal part of its annual snapshot in the wake of the Great Recession. The shift followed a recurring theme in conversations with family offices. “People felt let down by their wealth advisers,” he says of that downturn. “And there was a feeling that tangible assets were where they wanted to place at least some of their money—because they felt slightly more secure in things they understood, rather than the alphabet soup of financial products.” The crypto era only sharpens that contrast. For collectors, Bailey adds, the appeal is that these purchases balance investment with enjoyment.

The rise of Gen Z wealth is another driver, McMorrough says. “They have a whole different set of values and aspirations… and investing in a luxury business becomes cultural capital. Not all wealthy people are very cool, so you need ways to find your tribe and connect with other like-minded people.” There’s also social upside: It’s easier (and more interesting) to hold dinner-table discussion about dabbling in Birkin investing than to talk E.T.F.s.

Last year’s Art Basel & UBS Survey of Global Collecting found that Gen Z allocated 56 percent of its spend to collectibles, compared with a 41 percent average across all age-groups. Global mobility plays a role, too, according to McMorrough: Dual citizens looking to move value between countries can do so via goods instead of currency. She recalls an ultra-high-net-worth acquaintance, a jeweler, who decided to leave their unstable home country for another home they owned in a developed nation. “You weren’t allowed to take out more than $10,000 in cash, so they had all these gems and diamonds put in a plaster cast on their arm. When they emigrated, it wasn’t picked up by the security system. And that’s how they relocated. ”

Still, the enthusiasm around speculating on a single gemstone, fractionally owning a pair of sneakers, or buying into a fund dedicated to collectibles can be overblown. Many of the markets have softened sharply since their pandemic-era highs. Otis, the cultural-asset investment start-up, was sold to stock-trading app Public for an undisclosed sum four years ago. Today, it does not even exist as a subsidiary. A spokesperson was guarded about its fate. “Otis was not folded after we acquired it,” she wrote via email, while also adding, “We do not offer investments into luxury items at the moment.” The lack of clarity does little to inspire confidence in the acquisition or its business model.

In 2021, Dominic Khoo’s Watch Fund ended up in court in Singapore. It lost a lawsuit brought by five investors over contractual shortcomings and was ordered to repurchase timepieces, after having tried to cancel an agreement for $2.5 million. Khoo did not respond to multiple requests for comment from Robb Report, and the company’s website says it’s not open to new investment.

Everything they buy is an asset. It’s all an investment, to either keep as an heirloom or sell in the future for an appreciated value.

Rares, the sneaker-focused asset firm founded by Gerome Sapp, has also shuttered, returning monies to investors per its website. Sapp also did not respond to requests for comment. One likely issue is reputational risk: After Kanye West’s public implosion, driven by his unapologetic anti-Semitic rants, the value of sneakers like that record-setting Yeezy prototype cratered almost overnight.

That’s one of the core risks in dabbling in collectibles as an asset class, says Winston Chesterfield, who runs prestige-focused Barton Consulting. “The real commodity markets are built on fundamental rarities rather than manufactured, and potentially transitory, rarity,” he warns. “What if the brand decides to go crazy, and the whole [Hermès-owning] Dumas family just suddenly starts taking heroin? The whole thing is much more variable with so many risk factors… and it’s a dangerous variable to base an investment on.” (Gemstones, he says, stand apart in this vertical, of course.)

Chesterfield sees the emergence of these enterprises as opportunism, and he links it to the crypto era. “Wherever there is the possibility of an investment fund, you’ll find people willing to look at the opportunity, and you’ll also find pirates using people’s potential expectations of a return on investment for their own ends.” He hears echoes of the contemporary-art market of the early 2000s, which he describes as a Ponzi scheme–like play, relying on an endless influx of new cash to prop up inflated prices of emerging artists until it buckled in the pandemic’s wake. Recent years have brought sales nadirs for many galleries and artists.

More than anything, Chesterfield argues, buyers rarely view these goods as tradable assets in the first place. In his experience, there is no such thing as an “investor consumer.” “A classic-car collection: Their concept of it is fun. It’s a plaything. It is not an investment class,” he says. “Yes, a Patek Philippe is a nice piece to hand down, and it’s a nice piece to own, but it’s a game. It’s a hobby…. It’s not a strategy.” In Chesterfield’s view, these alternative-asset approaches don’t depend on true insiders to power their rise, either as capital providers or an eventual market. They depend on a class eager to be luxury-adjacent. “The people they’re pushing to invest in these funds are not the targets to buy these things overall,” he says, adding that fractional plays are particularly exposed since they rely on aspirational investors to inflate the value of what they hold. “A fool and his money are very quickly parted, and a lot of this stuff is very foolish and quite frankly very silly.”