As a hard asset, musical instruments can help diversify a portfolio. High-quality musical instruments generally hold their value well, providing some downside protection. And many have the potential for significant long-term appreciation. The challenge is finding the particular instruments that fill that bill and are within the investor’s budget. The market for vintage and collectible musical instruments is vast and diverse, really a collection of smaller markets. It spans everything from multimillion-dollar violins, cellos and violas from the 17th and 18th centuries to $300 acoustic guitars from the 20th century.
Violins are among the most stable investments in musical instruments. Since the financial crisis, the market for violins has performed similarly to those for other hard assets. “The higher end has gone up quite a lot in the last five years, despite the economic downturn,” says Frederick W. Oster, the proprietor of Frederick W. Oster Fine Violins in Philadelphia. But even within the world of fine violins, certain instruments have appreciated faster than others. Italian violins, for example, have appreciated far more quickly than German instruments.
One of the most notable violins makers is Guarneri, regarded as second in greatness only to Antonio Stradivari. Violins made in Cremona, Italy, during the city’s golden age of violin making, around 1650 to 1750, are the most highly regarded violins among players and collectors. They are plentiful enough to have a track record, so sellers and buyers have sufficient sales records upon which to base prices. Historically, valuable antique instruments have been an opaque, illiquid and risky market. But if done right, clients can get a high return on their investment.
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