27 June 2019
With volatility on the equity markets and uncertainty over government bonds, investors are looking for other ways to invest. One area increasingly attracting investment is art: whether paintings, artworks, events or happenings, investing in art looks to be a trend on the up.
Some investors are now considering asset classes with scarcity value, such as artworks, fine wines, vintage cars and real estate. In response, a number of alternative investment funds and initiatives have emerged to interpret and evaluate the new trends and frontiers of the art world, such as TenderToArt.
Is art a good investment in the current environment?
Since the last recession, the art market has recovered far more quickly than some traditional types of investment. Moreover, high net worth individuals (HNWIs) with a diversified portfolio that includes art assets have been somewhat insulated.
Historically, all sectors of the art market have done well, including in periods of high and rising inflation. This market offers investors real opportunities to invest in alternatives to equities or bonds that are less affected by market fluctuations or political uncertainty.
The figures speak for themselves: in 2016, 73% of asset managers (up from 58% in 2014) said that their clients had expressed an interest in including art and other collectibles in their investment portfolios. (Source: Deloitte Luxembourg & ArtTactic Art & Finance Report 2016).
A more modern way to manage a portfolio
A modern portfolio management strategy should have at least 5-7% of its investments in the art market. By effectively diversifying your portfolio you can boost your overall return.
The Deloitte Art & Finance Report also states that 72% of collectors said that they had bought art for investment purposes and not just for pleasure. Moreover, the number of clients and financial advisors making this choice increased from 3% to 6% between 2014 and 2016.
These figures appear to tell us that this is an excellent time to be investing in the art market.
Why invest in art through a fund?
While the art market numbers are undoubtedly appealing, in practical terms, buying an artwork requires careful analysis and considerable experience. Through an alternative fund, investors can rapidly and safely access the expertise and analysis that otherwise would take many years to acquire.