A recent analysis suggests that luxury watches, particularly those from renowned brands, might offer better returns compared to traditional investments like real estate. Conducted by Swiss finance professors, the study highlights the relatively stable nature of high-end watches as an asset class. Despite the downturn in the secondhand luxury watch market since 2022, certain brands have demonstrated impressive returns. The research delves into the performance of luxury watches against other investment options, revealing their potential appeal for diversifying portfolios.

Between January 2019 and September 2024, luxury watches exhibited lower volatility than stocks, bonds, and even real estate, according to the findings published on Social Science Research Network. Philippe Weisskopf, one of the study's co-authors, emphasized the importance of understanding specific brands and models when considering such investments. For instance, Rolex and Vacheron Constantin showed returns exceeding 50% post-2022, while Audemars Piguet and Patek Philippe tripled in value between 2019 and 2022.

Despite these promising figures, the study acknowledges the illiquidity of luxury watches, meaning they aren't traded as frequently as stocks. To address this limitation, the researchers excluded daily price fluctuations from their data. This approach aimed to provide a more accurate assessment of the asset's risk profile. Additionally, the study found that while luxury watches underperformed equities and gold in terms of annual returns, they outpaced fixed income and real estate investments.

Brands like Audemars Piguet achieved an average annual return of 11.68%, closely matching the global stock market's performance measured by the MSCI World Index. Meanwhile, Patek Philippe recorded an average annual return of 10.92%. These figures underscore the potential of luxury watches as part of a diversified investment strategy. However, the authors caution against viewing their findings as definitive investment advice, especially given current geopolitical and economic uncertainties.

Looking ahead, the future of luxury watch investments remains uncertain. While some experts predict stabilization, others remain cautious about significant upward trends. Nonetheless, the study provides valuable insights into the unique characteristics of luxury watches as an alternative asset class, appealing to investors seeking diversity and stability amidst turbulent financial markets.