Trading card games as an alternative asset: portfolio diversification and risk-return analysis

Abstract

This paper investigates Magic: The Gathering (MTG) trading cards as a modern class of emotional assets and evaluates their role within diversified portfolios. We construct an equally weighted index of 117 high-value “blue-chip” cards over October 2010-March 2025 and examine its interaction with traditional asset classes using monthly log returns and portfolio performance analysis. The MTG index displays near-zero correlations with equities, bonds, and gold, and delivers high average returns with volatility comparable to equities. When incorporated into a diversified allocation, even moderate exposure improves risk-adjusted performance, reduces maximum drawdown, and shifts the distribution of 12-month forward returns upward. Factor regressions using the Fama-French Three-Factor Model confirm limited systematic market exposure and a significant alpha component. Beyond financial performance, MTG cards exemplify the dual consumption-investment logic of emotional assets: they generate measurable returns while providing non-transferable “emotional dividends” linked to cultural meaning, nostalgia, and community embeddedness. The findings suggest that modern trading cards occupy an intermediate position between traditional collectibles and digital gaming assets, reflecting an ongoing process of assetization that bridges cultural and financial logics, while simultaneously raising challenges related to liquidity, authenticity, and issuer governance.