- Otis provides a platform to buy, sell, and trade collectibles, including sneakers, comics, cards, and art.
- Users can invest in fractional ownership or buy or sell the collectible outright.
- Otis possesses, maintains, and manages the collectibles in a dedicated NYC gallery.
According to a2020 study by Deloitte, ultra high net worth individuals invest between 2% to 10% of their wealth in alternative assets.1 Providing diversification benefits and limited correlation to the stock market, these wealthy individuals put money into assets that the average investor would have limited access to, such as fine art, precious metals, and collectibles.
Otis Wealth offers investors the chance to invest their money into alternative instruments. Otis works with modern collectibles to allow investors to invest in items that could provide massive gains over a medium to long-term investment horizon. Below we break down everything you need to know about investing with Otis Wealth.
Inside this review
What is Otis Wealth?
Otis Wealth is an investment platform specializing in collectible investments for non-accredited investors. The firm offers investors the chance to diversify their portfolios into a range of collectibles. Instead of spending thousands of dollars on buying the collectible themselves, they invest in partial ownership.
When Otis Wealth purchases the item, they securitize it, turning the item's value into a "market cap" and creating a number of shares at a specific price. As a result, the investor can invest their money in partial or even full ownership of art, comic books, or trading cards. This strategy allows the investor to diversify their risk by investing in several collectibles simultaneously at an affordable price.
Who is it designed for?
Otis Wealth is for investors that want to diversify their portfolio away from stocks and bonds. Collectibles offer the investor a chance to grow their money through investing in rare items that act as a store of value.
If you have a top-performing portfolio of stocks and bonds, what do you do if there's a market crash? By investing a small allocation of your portfolio into hard collectibles, you give yourself a safety net in the event of a catastrophic loss to the rest of the assets in your portfolio.
Who would not be a good fit for Otis Wealth?
This investment strategy doesn't suit investors that need access to liquid capital in their investments. Typically, Otis Wealth investments lock up your money for periods of two to ten years, depending on the deal and the exit strategy. If you need liquid assets in your portfolio, it's better to invest in ETFs, stocks, and bonds for immediate availability of funds.
How does it work?
Otis Wealth allows users to register an account for free. After setting up and receiving account approval, you can start investing in the collectible deals on the platform. You have a huge range of collectibles available in a variety of categories.
You can purchase shares in the collectible at an amount and a risk level appropriate for you. Users can invest in as many collectibles as they like, allowing them to diversify their portfolios. Each collectible comes with an investment horizon, and investors won't be able to sell their shares for the first 90 days after purchase.
Investable assets
The company has a wide range of collectible assets available for investors to select. Some of the top assets include the following.
Art
- Police Car by Banksy
- Greatest Hits, Three Cans of LaCroix, and Sneakers by Otis x fnnch
- Gone and Beyond by KAWS
Collectibles
- 2011 Hermés Birkin handbag
- 1981 Joe Montana Rookie Card
- 1999 Blastoise 1st-Edition Pokémon card
- Super Mario Bros. 3 game cartridges
Comics
- Daredevil #1
- X-Men #1
- Avengers #1
Sneakers
- Dior x Air Jordan 1 Low
- Nike MAG
- The Nike x Artist Collection
Otis Wealth's investing strategy
The Otis Wealth investing strategy is simple. The company invests in collectibles with a mid to long-term investment horizon. In other words, the company buys a collectible with the intent to sell it for a profit in two to ten years.
The company makes money through charging management fees on the capital it controls (assets under management) and commissions when it buys and sells a collectible asset. These commissions equate to 10% of the value of the asset on sale.
Performance
Otis Wealth reviews the investment potential of each asset it brings into its collection. The team conducts due diligence on the past selling history and valuations of everything it brings under the investment umbrella. While it's impossible to predict what returns the investor can expect, historically, investments in collectibles and fine arts bring higher returns than the stock market.
However, it's important to note that only a few collectibles ever manage to achieve massive valuations. It would help if you had an expert ensuring you get the right piece at the right price, and that's where Otis Wealth comes into play.
How much does it cost?
Otis Wealth charges a 1% management fee on all invested capital. The company also charges a 10% sourcing fee in the collectibles they acquire for the investment platform. The company also receives a 10% share in the profits on the sale of the collectible. However, the investor has no membership or account fees.
How to sign up
Signing up for Otis is easy. Visit the company's official website and register an account. After approval, you can start investing in shares in your favorite collectibles. Otis is available to non-accredited investors, with shares in collectibles starting as low as $1.
Pros & cons
Pros
- Allows small investment amounts in valuable collectibles.
- Easy interface and investment platform.
- Large number of diverse investment opportunities.
- Otis funds which purchase the collectibles are registered with the SEC.
Cons
- Focus is on cultural collectibles, mainly rare sneakers, modern art, and trading cards.
- Owners do not get physical ownership of the collectible.
- Relatively high fees for sourcing, commission, and management of assets.
- Illiquid market with capital tied up for long periods.
Alternatives
Otis involves itself in the business of providing investment opportunities into collectible assets. Several companies are offering a similar investment strategy. Rally is the closest example of a direct competitor to Otis.
However, Otis focuses more on the sneaker and comic/trading card market. Whereas, Rally focuses more on the traditional collectibles like player jerseys and high-value investments. Other alternatives include options like Vinovest, where you can put your money into fine wine collections.
Verdict
Otis Wealth allows average investors to diversify into collectibles by providing a platform for fractional ownership. Unaffordable for smaller investors, Otis seeks to make a more liquid and accessible market for cultural collectibles such as sneakers, trading cards, and art. Investing in collectible assets may be appropriate in small amounts of less than 2% of funds but investors should be aware that their funds will be tied up for long periods in relatively illiquid assets with a high fee structure.
Article source
1 Deloitte. "Collectibles: An integral part of wealth, https://www2.deloitte.com/content/dam/Deloitte/ch/Documents/consumer-business/deloitte-ch-collectibles-integral-part-wealth%20-%20Copy.pdf". October, 2020.
