Investing in Art

Through the centuries, many investors have chosen to invest a good part of their wealth in art and other collectibles.

Although putting money into art may not be as straightforward as investing in bonds or equities, the art market is attracting increasing interest.

As a result, we are now seeing a lot more new and old investors that are looking to put their money at art.

The growth of the art market has gone hand in hand with the great wealth creation of the past decade. Many more investors and art lovers are entering the market and many of them are getting heavily involved in the art market for the very first time.

Only until recently there has been little economic research into the performance of art as an asset class. But with growing interest, this is now changing. Many financial institutions are now building large databases that cover many segments of the art market ranging from furniture to prehistoric antiquities.

The art market is too fragmented to draw definite conclusions about the overall performance of the entire asset class relative to other markets.

Cycles in the art market are not necessarily linked to those of other asset classes and there is no correlation between art prices and the equity markets, just as there is little correlation between different categories within the art market.

This might make art a good choice for investors that want to diversify their portfolios. It's true that some staggering returns can be made when art-work goes up i.e. 300%, but generally that is not the case.

Art really shouldn't be treated solely as another asset class since its value is subjective. However there are opportunities where an artist's work is undervalued and prospective art investors can spot some of the trends.

Contemporary art and old masters, for example, have realized high prices at auction for the past few years, but investment in art should not be solely financially motivated!...Read More