Back in the mid-1980s, third-party coin grading became an important game changer to the numismatics marketplace. After many years of unethical sellers, market manipulators, and just plain over grading, the advent of unbiased and impartial third-party grading seemed to be just the thing the coin collecting marketplace needed to stabilize and get to the proverbial next level. Coin collectors and enthusiasts, however, were not the only individuals watching the rise in values of coins closely. Many Wall Street financiers and brokerage firms at the time were also amazed as to how much graded coins could sell for. This attracted the attention of several firms, but Merrill Lynch saw an opportunity where some on Wall Street saw great risk.
Merrill Lynch created the Athena II fund in 1988 as a way to allow investors to invest in a limited partnership consisting of rare coin acquisitions. This form of fractional investing allowed investors to not physically hold the individual coins the fund was buying, but own fractional shares in them. The greater financial news media at the time was already abuzz with the latest record breaking rare coin auction sales. General interest in numismatic treasures was at an all time high, and Merrill Lynch thought at the time that the general public was ready to invest in the market for numismatics via financial instruments like partnerships and mutual funds. In theory, the concept was perfect. Merrill Lynch would pay an advisory fee to those in the rare coin market and assemble a high profile collection of pieces that were thought to steadily increase in value on the secondary market. Investors on Main Street as opposed to Wall Street would simply put their faith in Merrill Lynch as opposed to attempting to buy rare coins outright without understanding the market for numismatics, which even to this day is quite sophisticated. Owning fraction shares of these rare coins, or shares of a fund that invested in these coins, just seemed safer to most investors at the time.
Unfortunately for Merrill Lynch at the time, the rare coin market proved to be just too sophisticated and problematic for a brokerage house to manage. By the early 1990s, the fund would be dissolved, and Merrill Lynch would pay back all investors of the fund in full to avoid any court proceedings and possible investigations.
Today, should someone want to invest in numismatics or the overall antiques and collectibles trade, they should not only be versed in the trade, but also educated in economics and finance. Investing in tangible assets of a collectible nature can be quite riskier and costly than investing in paper assets or even real estate, but it can be done, should the investor have the knowledge and understanding of the idiosyncrasies of the market they are investing in. That said, it isn’t for the average investor, as Merrill Lynch proved with its now failed Athena fund experiment. Ironically, however, what is old in the antiques and collectibles marketplace is new again.
With the rise in values in speculative collectibles like vintage comic books, vintage “Magic: The Gathering” cards, and even vintage toys and video games, fractional investing is making a return to the post e-commerce internet. Now, rather having to fork over $100,000 for an Alpha Edition Black Lotus game card graded by BGS in 9.0 condition from “Magic: The Gathering” or a $60,000 CGC-graded copy of Incredible Hulk #181, the average speculator or unsophisticated investor can buy fractional ownership in these items from sites like Mythic Markets or Otis Investments. Both of these websites allow almost anyone to buy at least one share of ownership in these holy grail collectibles. With an entry point under $100 in most cases, would-be investors can simply click the “buy” button and be on their way to owning a piece of their chosen collectible, just like buying a share of stock or the latest high dividend paying ETF. But are these markets really that simple, and further more should the average investor be buying a “piece” of a rare collectible?
The answer to this question is in the details. Unfortunately, most of these up and coming websites are too new to establish any long-term validity in the trade. Even details on how they sell and appraise such items are not clearly spelled out on most of their websites. Other companies have tried similar tactics over the years, and most have quietly exited the trade without as much as a whimper. This tells me that the track record of investing in fractional ownership is not too stable. Furthermore, liquidity risks are multiplied when entering into these type of scenarios, and that is just one of the problems with this type of venture. By their nature, antiques and collectibles are overall illiquid. This is especially true if the seller wants to maximize their profits and get full secondary market value for their beloved treasures. So in a sense, these would-be investors are choosing to invest in an illiquid item and just by having only fractional ownership in that item, they are surrounding that illiquid investment with a further level of illiquidity. That sounds like a recipe for disaster in my opinion.
Another problem with this idea is what if an investor wants to sell the fractional shares they have accumulated. How is the value of their shares being calculated? Are they valuing their shares based on how much was paid to acquire the item in question or are they being calculated on the price of the proposed asset on the secondary market, even though a valid retail price hasn’t been established yet because the item was not sold? These are just some of the questions a would-be investor needs to ask before going into any venture like this. In my opinion, it would be better for the investor to buy items they can afford to own rather play in the high-risk waters of fractional ownership.
In conclusion, it will be interesting to see what develops with these companies and their services going forward. If this is something that can be done correctly and the results can be proven, I may change my mind on fractional investing in the antiques and collectibles trade and support it. But for now, the past is all I have to determine the possible future. Thanks for reading!

Shawn Surmick has been an avid collector since the age of 12. He currently resides in his hometown of Boyertown, Pa., and is a passionate collector of antiques and collectibles. His articles focus on various topics affecting the marketplace.