The Stock Market for Culture
Investing in an alternative investment like a collectible can come with numerous advantages.
Aside from offering excellent diversification, these assets provide something that traditional assets can’t, the joy of owning the item.
Unfortunately, many prized collectibles are naturally very expensive, typically limiting these investments to high net worth individuals. Fortunately, thanks to Otis, all investors can now start to reap the benefits of this unique asset class.
With Otis, anyone can own an iconic piece of culture with investments like contemporary art, sports memorabilia, comic books, sneakers, and more.
But, how does Otis work?
What are the pros and cons involved?
In this detailed Otis review, we’ll answer those questions and more, including what it is, how to get started, and the kinds of returns you can expect.
Art, sneakers, sports memorabilia
No annual fee
Varies with each asset
High. Investors get to vote when Otis sells an item and can sell their shares on their 24/7 secondary market.
Open to investors outside the US?
No, Otis is only available to US residents over the age of 18
All items are insured
New assets are available every week
Very low investment minimums
Wide variety of investment opportunities available
Mobile app for Android and iOS
Investors don’t get physical ownership of the item
Only available to residents in America
Currently, Otis is a mobile-only platform
Any investor with a passion for art and collectibles
Investors looking to diversify their portfolio with unique assets
Investors who are comfortable with long-term investments
What is Otis?
Founded by Michael Karnjanaprakorn in 2018, Otis Wealth is an investment platform providing every investor with the opportunity to purchase fractional ownership of high-end, culturally significant collectibles.
The strategy works through fractional ownership, the process of selling smaller shares in each item. This way, the massive investment minimums associated with this asset class are no longer a barrier, opening up access to the everyday investor.
Who should use Otis?
Otis is an ideal investment platform for:
- Any investor with a passion for art and collectibles.
- Investors looking to diversify their portfolio with unique assets.
- Investors who are comfortable with long-term investments.
How does Otis work?
Here’s how Otis operates:
1. Otis sources the items
Otis Wealth sources culturally significant, investment-worthy items from galleries, auction houses, collectors, and emerging artists.
Each item is then thoroughly vetted using a combination of quantitative and qualitative analysis and industry expertise. Otis considers provenance, condition, cultural significance, quality, rarity, comparable sales, and more.
2. The asset is fractionalized with the SEC
Once Otis has approved the item, the SEC performs its audit to determine Otis’s ownership of the asset. The asset is then split up into fractional shares.
3. The shares made available to investors
Once the item has been fractionalized with the SEC, the shares are made available to investors. Otis Wealth also takes transparency seriously and provides a detailed Asset Market Report that investors can use to make informed decisions and understand the risks involved.
4. Two paths to returns
Shareholders now have two options to cash-in on their investment.
They may buy and sell shares on Otis’ secondary trading platform, or wait for the asset to be sold and earn a part of the proceeds.
Note: Once Otis owns the item, they plan to hold it for the long term, typically between three to seven years. Unlike some other fractional ownership platforms, shareholders get to vote before an asset is sold by Otis. Once the asset is sold, Otis claims 10% of the profits, with the rest distributed to shareholders on a pro rata basis.
Here are some of Otis’ most important features:
1. Secondary market where investors can trade shares
Typically, investing in cultural assets like collectibles is highly illiquid, making it very difficult to cash out.
Fortunately, Otis provides a trading platform that’s open 24/7. This platform operates like the stock market, where Otis members can buy and sell shares, improving cash flow.
Assets open for trading about three or four weeks after they fill in pre-sale. After that, you’re free to place a buy order or sell order at any time.
2. Investors can view the items they’ve invested in
Otis’ goal was always to build a museum-worthy collection that collectors could experience.
Part of that goal is being able to have the items on display. Therefore, Otis will occasionally hold events displaying some of the assets in physical spaces in a New York City gallery.
3. Assets are securely stored and insured
Otis Wealth securely stores each asset in a climate-controlled facility. The UOVO Fine Art storage facility in New York houses many of Otis’ assets, while PWCC in Oregon stores most trading cards and sports memorabilia.
Additionally, the Aspen American Insurance Company insures all assets during both transportation and storage.
How to get started with Otis
You can view all the available assets on Otis’ website.
However, investors can only purchase shares through the mobile app.
To get started with Otis Wealth, follow these steps:
Step 1: Begin by downloading the Otis app from the App Store or Google Play store.
Step 2: Once you’ve downloaded the app, Otis will need some basic information, such as your name, mobile number, date of birth, and social security number to verify your identity.
Step 3: You’ll then need to link your bank account to fund your Otis account.
Step 4: Finally, Otis will then ask for your income, financial objectives, risk tolerance, and employment status to determine the best offerings for you.
Step 5: Your registration is now complete. You’re free to browse the offerings and invest in the items that interest you.
Otis charges an average sourcing fee of around 5% which is included in your share purchase price. This includes the sourcing fee and helps cover the insurance, transportation, and storage costs and the 1% fee on invested capital charged by the broker-dealer.
Withdrawals and deposits are free, and there are currently no trading fees.
Note: Otis plans to charge a nominal trading fee as the platform matures.
Additionally, Otis is entitled to claim 10% of the profits upon the sale of an asset. However, they may opt to waive this fee at the time of the sale.
Otis Potential Returns
Your returns are highly dependent upon the assets you invest in and how the market for that asset performs.
Investors can earn by selling their shares in the secondary market. However, Otis also distributes returns after selling an item, usually taking place after three to seven years.
Investors also stand to earn when Otis loans an item out to be displayed.
Pros and Cons of Otis
Here are some benefits and disadvantages of investing in Otis
- Aspen American Insurance Company insures all assets offered on Otis for both transportation and storage.
- New offerings are available on the app weekly.
- Very low investment minimums, with most shares selling for $10.
- A large variety of assets are available.
- There’s an Android and iOS mobile app.
- Investors don’t get physical ownership of the item.
- Otis is only available to US investors over the age of 18.
- Otis is currently a mobile-only platform.
Risks of Investing Through Otis
While investing in any asset carries an element of risk, Otis has taken several steps to minimize risks for investors.
Aside from insuring and securely storing all assets, Otis is partnered with Dalmore Group, LLC, a registered broker dealer with FINRA (Financial Regulatory Authority) and SIPC (Securities Investor Protection Corporation).
One of Otis’ affiliates owns each asset or group of assets. When investing, you become a shareholder in the sub-company that owns the asset.
As a result, if Otis were ever to cease operations, you’ll still retain partial ownership of the underlying asset you’ve invested in.
Otis has made investing in culturally significant collectibles far more accessible than it’s ever been in the past.
And if you wanted even more incentive to invest with Otis, there’s a promotion underway.
If you sign up for Otis with MoneyMade and fund your Otis cash account with at least $200, , they’ll add one share of a specific asset between $10 and $25 to your account. You’re free to keep the stock or sell it through Otis Trading.
Note: This offer is only available for those who haven’t previously funded their Otis cash account.
If you’d like to discover more alternative investments, like farmland or wine, consider the MoneyMade Investor Quiz. All you need to do is answer a few simple questions, and MoneyMade will suggest a list of alternative assets that suit your investing needs!