Portfolio Diversification: Luxury Watches, Rare Wines, And Masterpiece Arts, The New 'Passion' Assets For Ultra HNIs

By Rohit Suri

Long seen as mere status symbols, contemporary art, luxury watches, vintage cars, and rare wines are now emerging as a key addition to the portfolios of ultra high net-worth individuals (UHNIs), as they increasingly look to their passions to find the next alpha.

For decades, these vanity acquisitions were only seen through the prism of lifestyle consumption. However, this segment of investment is taking the turn towards a structured asset class. A Knight Frank India report of 2024 validated this view, as over 17 per cent of Indian UHNIs or individuals with net-worth above $30 million invested in passion assets.

From Vanity To Valuation

Passion investing, though sounding like a concept rooted in romanticism, is actually driven by the relentless pursuit of alpha. Passion assets have solid inflation-hedging properties, and hold the potential to deliver strong returns irrespective of how the equity, real estate or commodity market is performing. The uncorrelated returns, especially in an era marked by geopolitical headwinds and volatile macroeconomic landscape, make passion assets a highly pragmatic bet for UHNIs.

Barring the correction triggered by the once-in-a-decade pandemic, passion assets have often delivered returns that challenge equity indices. Despite the couple of rough years due to the onset of the Covid-19 pandemic, the Knight Frank Luxury Investment Index points to strong returns of 38.60 per cent between 2016 and 2026.

Some passion assets, including rare watches and classic cars, have even outmatched benchmarks like S&P 500 in their boom cycles. For instance, classic collections under the Rolex and Patek Philippe brands have rocketed by about 140 per cent in a 10-year period. Specific watches like Patek Philippe Nautilus 5711, available scarcely at $30,000, soared above $100,000 after being discontinued in 2021.

Lately, passion assets have come under renewed focus, as precious metals have begun losing their allure. Gold is down significantly since the onset of the West Asia conflict despite being a “safe-haven” asset, and silver has shrunk by more than a third from its January-end peak.

Global wealth narratives for 2026 clearly indicate that ultra-affluent investors are targeting alternative, value-add opportunities with increasing conviction rather than relying solely on legacy portfolios. And Indian UHNIs aren’t aloof to this trend either. The younger generation of wealth creators and inheritors are not content with parking their investments in conventional fixed-income instruments or passive index funds. They want their capital to reflect their personal ethos while simultaneously acting as a robust hedge against market risks.

Liquidity And Data Dilemma

While India certainly has the appetite for passion investing, what’s missing is a regulatory and infrastructural framework that makes trading into such alternative assets seamless.

Verifiable pricing data is among the first goals to achieve on this front, as currently, the Indian passion assets market suffers from a lack of institutionalised valuation and authentication. For instance, the rates of a 1970s Rolex Daytona or a marquee M.F. Husain canvas are determined by a small coterie of intermediaries, thereby creating a significant information asymmetry.

Also, what policymakers and market watchdogs need to set up is a structured secondary market. The existence of transparent, regulated trading platforms will make exiting high-value collectible investments easier. At present, the lack of such a platform means that sellers need to go through an array of private brokers, or wait for an annual auction, which leaves their capital locked for months despite the intent to book profit.

What can be a gamechanger on this front is a legal framework for asset tokenisation. This concept of Blockchain-based fractional ownership is taking shape globally, as it allows even mid-sized investors to own micro-shares in their choice of multi-million-dollar vintage assets.

India could be moving ahead in this direction, as a Private Member's Asset Tokenisation (Regulation) Bill, 2026 was introduced in Parliament in March this year. If such legislation is passed and enacted, it will facilitate real-time, frictionless liquidity, while also drastically lowering the entry barrier for investors.

The Road Ahead

By implementing a legislative and infrastructural framework, India could develop regulated marketplaces for passion assets, with centralised pricing, transparency, and standardised valuation protocol. This would also eliminate the risk of counterfeits, which currently haunt the vintage collections market.

This segment also needs specifically designed logistics and insurance services. For instance, tangible passion assets, such as rare wines and 100-plus years old vehicles need climate-controlled storage and carefully designed insurance covers.

Finally, there is an urgent need for holistic portfolio integration. Most Indian UHNIs currently hold their passion assets completely off-book. They are managed in silos, entirely divorced from the investor’s broader wealth strategy, estate planning, and tax structures.

This is where advanced wealth-tech platforms must step in. The next evolution of wealth management will not just report on assets under management (AUM) consisting of traditional stocks and bonds. It will require digital infrastructure capable of tracking, valuing, and insuring a client’s alternative lifestyle assets on a single, consolidated dashboard. When an investor can view the real-time appreciation of their contemporary art portfolio right next to their private equity exposure, passion truly becomes quantifiable.

The author is CEO of the UNHI Business, Ionic Wealth

(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)