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BNY Wealth recently surveyed investment decision-makers at 290 single-family offices—the private firms that manage the fortunes of families with at least $250 million in investable assets. Nearly half of respondents oversee more than $1 billion.
Notably, nearly two-thirds of the family offices surveyed held assets uncorrelated to their broader investment programs, almost double last year’s share. More offices reported investments in luxury assets, from watches, fine jewelry, art and spirits to sports teams and music rights.
The report suggests the growing popularity of luxury assets may reflect their potential as inflation hedges. Inflation, along with potential central bank missteps, ranked as the top risk family offices see over the next five years.
“Certain luxury assets, such as sports and media rights, that we are increasingly seeing in UHNW [ultra-high-net-worth] portfolios can offer protection against inflation through pricing flexibility and recurring cash flows,” said Chuck Long, head of international markets and family office at BNY Wealth.
But the categories that grew most year over year weren’t those that throw off cash. They were tangibles like watches and fine jewelry, art and spirits.
In that sense, buying a Patek Philippe may not be so different from buying gold: Both are tangible stores of value meant to hold up against market volatility, geopolitical tension and rising inflation.
Recent performance data is mixed but points to overall stability. The Knight Frank Luxury Investment Index, which tracks 10 categories of collectibles, slipped just 0.4% in 2025 after declines across most asset classes in 2023 and 2024. Fine art sales across major auction houses rose 11% last year, led by the $236.4 million sale of Gustav Klimt’s Bildnis Elisabeth Lederer at Sotheby’s in November. Watch prices climbed 5.1%, propped up by the two biggest names on the secondary market: Patek Philippe, up 12.1%, and Rolex, up 4.6%. Fine wine, by contrast, fell 2.5% in 2025 as U.S. tariffs weighed on demand, leaving prices down nearly 25% from their 2022 peak.
Do luxury assets actually hedge inflation?
Long-term research on luxury assets as investments is similarly mixed. A 2021 study by Duke University’s Campbell Harvey and researchers at Man Group examined eight periods of high inflation in the U.S., from World War II through the run-up to the 2008 financial crisis. During those inflationary regimes, art returned about 7% a year above inflation, wine 5% and stamps 9%.
But a 2025 study in Applied Economics found that while art hedged against inflation over the long term in France, it did not in the U.S. or U.K. And in 2022, Credit Suisse, in collaboration with Deloitte Private, found that some luxury goods hold up far better than others: Chanel handbags, traditional Chinese art and watches did well in high-inflation periods, while fine wines, modern and contemporary art, and American and Latin American art “tend to suffer in high-inflation regimes.”
Whether luxury assets make good investments or not, they are booming. Sotheby’s reported record first-half sales of $4.4 billion in 2026, up 58% from a year earlier, and CNBC reported that wealthy consumers are increasingly buying jewelry, especially colored gemstones, as investments.
The same families putting money into luxury assets are still betting heavily on artificial intelligence. For the third straight year, BNY found that AI ranked as the most compelling investment theme for the next five years, cited by 68% of respondents.
Taste as a differentiator
Marc Andreessen argued last year that venture capital may be one of the few jobs safe from AI, since deciding where to invest relies on “intangible” skills that make it more art than science.
In February, Y Combinator cofounder Paul Graham posted on X, “In the AI age, taste will become even more important. When anyone can make anything, the big differentiator is what you choose to make.” For the ultra-wealthy, the big differentiator may be what you choose to buy.
The research on luxury investments echoes this. The Credit Suisse findings suggest that what holds value isn’t luxury per se, but specific tastes. Nowhere is that more evident than in the art market.
Art and the economy of the very rich
In a 2009 paper in the American Economic Review, economist Benjamin Mandel argued that art can’t be valued like equities or other investments, because its value to the owner comes both from the aesthetic pleasure it provides and from the signal of wealth it sends—what economist and sociologist Thorstein Veblen called “conspicuous consumption.” That second payoff grows with the price.
Mandel’s work also informed a 2012 New York Times Magazine column on how the art market thrives on inequality, which argued that fine art belongs less to the broader global economy than to the peculiar economy of the very rich. A 2011 study in the American Economic Review by William Goetzmann, Luc Renneboog and Christophe Spaenjers reached a similar conclusion. The authors found a long-run relationship between top incomes and art prices and argued that high-end art prices are driven less by the average person’s buying power than by how much the wealthiest can spend.
That dynamic mirrors what economists call a “K-shaped” economy, in which the wealthy earn and spend more while lower-income households fall behind. Research from the Federal Reserve Bank of New York found that households earning more than $125,000 saw cumulative real spending growth of about 7.6% through March 2026, compared with just over 1% for those earning under $40,000. Some economists, including researchers at the Minneapolis Fed, argue the data don’t tell such a clean story.
In this economy, the value of luxury assets like art, watches and fine jewelry is tied to their ability to signal that their owners can afford what others cannot.
As Andy Warhol wrote in his 1975 book The Philosophy of Andy Warhol: “I like money on the wall. Say you were going to buy a $200,000 painting. I think you should take that money, tie it up, and hang it on the wall. Then when someone visited you, the first thing they would see is the money on the wall.”
This story was originally featured on Fortune.com
