Exploring the Diversification Benefits of NFT Sectors

Sammanfattning: This study investigates the evolving diversification benefits of adding Non-Fungible Token (NFT) sector indices to a portfolio consisting of traditional assets. Focusing on two investor types with contrasting risk appetites, this research examines the diversification potential before and after the 2020 Bullrun. Contrary to prior findings, results indicate that the diversification benefits of NFTs have increased over time, benefiting investors across the risk spectrum. Additionally, the study highlights the varying diversification potential of different NFT sectors. The findings challenge the notion that NFTs' diversification advantages have diminished, revealing the importance of considering NFTs as a diverse market rather than a singular asset type. This study paves the way for further investigation into the drivers of diversification benefits in different market conditions and NFT subcategories.