In many ways, investing in Art is similar to acquiring real estate, equities or any other asset;
The security of capital is the highest priority.
The quality of the investment determines the eventual return with price determined by supply and demand.
Art for Investment aims to buy and hold pieces of art for a period of 3 to 10 years, with investors being rewarded through sales in the most apprpriate market, whether it be by private treaty, auction or gallery sales.
Some of the many reasons to consider investment in an Art Fund on an equal footing with the more traditional options are:
A low correlation between returns from Art and those of traditional investments such as Financial Markets and Real Estate. The reason for this is that the cyclical peaks and troughs for financial assets have historically not coincided with those of the Art market. This makes Art an appealing investment class for diversification. A limited supply of quality items especially from deceased artists, ensures support to the market; in contrast to share issues which are easily made, diluting existing holders' interests.
In todays troubled financial markets, the Art Market is more insulated from fluctuations in the general economy as compared to investments such as Equity and Real Estate. In times of trouble, artistic objects attain a currency value in themselves, retaining value against depreciating currencies and stockmarkets, with the added advantges of portability and visual gratification. Art is globally recognised as a powerful asset class and store of value. TV programmes such as Antiques Roadshow attract millions of regular viewers with art objects being converted into an everyday currency. Studies based on the Mei Moses All Art Index have consistently beaten equity growth over the last 50 years.
An increased understanding of Art as a form of enhancement in everyday living gives it a real alternative to saving for the future both by individuals, corporate and governmental organisations, and there is a burgeoning appetite for "top end" Art. New entrants to the market bring not only enthusiasm and the vibrancy of their regional interests, but also opportunities in niche markets that have yet to be discovered by the traditional auction houses and art galleries. It is in identifying early trends or specific artists where superior returns can be achieved.
SIPPs. Within the United Kingdom, art investment is a category for S(elf)I(nvested)P(ersonal)P(ensions) which would attract a tax rebate at the highest marginal rate.