Does billionaire Paul Allen’s deep-sea discovery of one of Japan’s largest World War II battleships earlier this year signal that it’s time for wealthy clients to consider investing in shipwreck search and recovery?

That depends. Shipwreck treasure hunting may be exciting, but it can be a particularly treacherous investment, say experts. 

The world’s ocean floors may be littered with shipwrecks, but many of those in shallow waters have already been found. “Operations are now moving to deep water, which is more expensive to explore,” says Jim Goold, an underwater archaeologist and attorney with Washington, D.C., law firm Covington & Burling. 

Some operations, such as Allen’s expedition to find and explore the wreckage of the battleship Musashi, sunk in 1944 by a U.S. submarine during the Battle of Leyte Gulf, are undertaken to locate and document historical wrecks. 

“I don’t know of any treasure-hunting outfit that has returned a profit to investors since the 1980s,” he says.

Although a number of public and private companies claim they actively engage in shipwreck treasure recovery, “The Mel Fisher days are over,” says Goold, referring to the legendary treasure hunter. In 1985, Fisher gave prominence to the trade by salvaging about $450 million in gold, silver, jewels and other artifacts from the wreck of the Spanish galleon Nuestra Señora de Atocha, which sank in 1622 off the Florida Keys. 

But such bountiful wrecks are quite rare, meaning treasure hunting is more of a deep-sea lottery than a formula for investment growth, observers say.

“I have represented a number of investors who were unhappy about being taken,” Goold says.

Voyage To The Bottom Of The Sea
If you just look at the numbers, trolling the world’s oceans for sunken treasure would seem to be a potentially lucrative undertaking.

Over 3 million undiscovered shipwrecks are scattered across the world’s seabeds, with a combined value of hundreds of billions of dollars, according to UNESCO. But experts say only a hundred or so might have carried cargoes worth $50 million or more.

Hedge funds, private equity firms and affluent individuals have long provided funds to back recovery expeditions. Private companies in this space include U.K.-based Blue Water Recoveries; West Palm Beach, Fla.-based Treasure Expeditions; and Santa Monica, Calif.-based Galleon Ventures. There are also a few private firms in Asia searching for sunken ships thought to contain valuable porcelain and other fine ceramics.

Of the half-dozen or so public companies in the treasure-hunting industry, most trade over the counter. These include Blue Water Ventures International, Seafarer Exploration Corporation, Oceanic Research & Recovery Inc. and Deep Blue Marine.

Tampa, Fla.-based Odyssey Marine Exploration, which trades on the Nasdaq, may be the most prominent of the public companies in this space. In 2011, Odyssey found the British merchant ship S.S. Gairsoppa, which was sunk by a German U-boat 300 miles off Ireland’s coast in 1941. Odyssey recovered more than 110 tons of silver ingots from the vessel. Under its agreement with the British government, Odyssey receives 80% of the net value of the silver it has recovered—which totaled about $210 million as of July 2013, according to news reports.