What Is a Limited Edition?

A limited edition is a small run of items, such as a print of a master image, that is intended to create a sense of rarity or exclusivity among potential collectors. Limited editions are also referred to as "special editions," "collector's editions," or "deluxe editions."

In finance, limited edition items can be viewed as a type of alternative investment, with limited edition artwork being a common example.

Key Takeaways

  • A limited edition is a rare asset that is sought after by collectors.
  • Examples of limited editions include artworks, wines, and rare cars.
  • Limited editions are a type of alternative asset and are often traded by international investors.

Understanding Limited Editions

Historically, artists have produced limited runs of their artwork from as far back as the 18th century. For example, the printmaker Francisco Goya (1746-1828) deliberately published small quantities of material that wore out over time, partly as a means of creating scarcity for his artwork.

More recently, limited editions have been created to market products as diverse as cars, video games, DVDs, musical albums, special vintage wines, and many others. What these items all have in common is that they are typically made in smaller quantities than their "normal" variants, although the number of limited-edition items produced can itself be quite large.

Perhaps the most famous example of limited editions are those made by visual artists, who typically produce a set number of copies from their original works. Each copy is numbered and signed by the artist before the master image is either destroyed or marked off, to prevent its reuse. This tends to immediately increase the value of the limited edition copies that are made from the original version.

These limited edition prints are typically affixed with a fraction, such as 25/50, which is called the edition number of the work. A mark of "A/P" indicates that the print is an artist's original proof—a singular copy that is especially valuable.

Real-World Example of a Limited Edition

The popularity of limited edition artworks has grown significantly in recent years, driven by the rising popularity of alternative investments more generally. In 2018, revenues from art auctions reached $29.1 billion worldwide, with some art pieces selling for tens of millions of dollars. In 2017, Leonardo da Vinci's painting, Salvator Mundi, sold for a staggering $450 million.

Aside from art, another area where limited editions have become closely followed by investors is limited edition wines and whiskies. This niche market reached nearly $500 million in annual sales in 2018 alone, with individual items selling for hundreds of thousands or even millions of dollars. In 2018, a rare whisky from 1926 was sold for over $1.5 million. Likewise, a bottle of Burgundian wine from 1945 was sold for over $500,000 that same year.

Both of these items benefited from their rarity. The whisky was a unique item whose bottle was hand-painted by an artist, while the wine was part of a limited edition run of only 600 bottles.