A new breed of investment vehicles is offering art afficianados a way to put their portfolios where their heart is, by investing in fine art.
According to Motley Fool, these funds capitalize on the fact that the value of fine art has proven to beat the performance of many stocks on the New York Stock Exchange as well as such popular investment barometers as the S&P 500 and the Wilshire 5000.
There are now a dozen art-based mutual funds where investors can put their money to work.
The fund managers say they are looking for investors who have a passion for art, and want to diversify from their more conventional portfolios.
The attraction is the soaring prices for big names in the modern art world which can be truly breathtaking.
ART GOING HIGHER AND HIGHER
Results from major auction houses indicate that name artists like Basquiat, Warhol and long time favorites like Matisse, Degas and even lesser lights like Brice Marden, David Hockney, Damien Hirst, Takashi Murakami and Banksy fetch works soaring into tens of millions of dollars each.
To own works by any of these artists outright would require very deep pockets. At a recent auction sale, a triptych by the British artist Francis Bacon sold for $84 million. A painting by the American pop artist Roy Lichtenstein fetched over $46 million, while a work by David Hockney fetched just over $40 million, and and a major multi media work by Cy Twombly went for slightly less.
The advantage of investing in an art mutual fund is that it has expertise and pooled capital to create a portfolio of fine art which can give investors the pleasure of owning work by leading creators, the value of which has increased at very attractive rates.
DIPPING INTO ART FUND CHOICES
Not all art-based mutual finds are alike. Let’s look at three of the most prominent:
Masterworks allows investors to buy shares (known as “fractional ownership”) in the individual artworks it buys. Investors can trade those shares on the in-house trading platform.
Yieldstreet offers two art investment options.Its Prism Fund holds real estate portfolio as well as art loans. Investors can buy in for as little as $500. Moving upscale, Yieldstreet recently launched its Art Equity Fund, which focuses on Post War and Contemporary artists. The minimum stake is $10,000. The company expects the fund to generate 15% to 18% returns over the 5-year art holding period.
Anthea Art Investments offers two investment vehicles: Its Contemporary Art Investment Fund invests in art, paintings, sculpture and photos from the Postwar period (i.e. after 1945). Its Contemporary Art Investment Opportunities service enables investors to make tax-advantaged art investment across a wide range of artworks.
Then there is MoneyMade, which boasts it has the expertise “for finding unique investments.” It believes in a diversified portfolio, advising clients on real estate, art investing, fine wine and a range of alternative investment options.
Experts point out that while investors can use art to diversify their portfolios, they also warn that the vlue of contemporary art can go down as well as up. But as one fund advisor observed, “contemporary fine art looks much better on your wall than a share certificate.”
Josh Martin
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