Investing in art
In the news this week is the launch of a public art index, based in Paris, that will enable people to buy shares in art works.
A&F Markets will allow investors to buy and sell shares in art works, in much the same way as they might buy and sell company shares.
Shares for works of art valued over €100,000 (£85,880) will start at €10.
The art exchange will only trade in modern works of art from the 19th century onwards. These will include paintings, sculptures, video installations and photography.
The scheme has already been lambasted by art critics, with one calling the idea ‘a stinker’. They fear that treating art like a financial commodity can debase an artist’s work.
From an investment perspective, we would caution our clients to think very carefully before parting with their money via this or any other alternative investment stock exchange. Whilst art is a valid alternative investment, the financial value should be a secondary consideration.
People who choose an alternative investment usually have a love or appreciation of the object; whether it be wine, art, antiques or stamps. When their collection goes up in value, this is a nice benefit, but should not be the primary objective.
In fact, the instances we hear of people leaving their art collections to a gallery instead of their family on death is evidence that the love of art often comes before money.
Over the past three years I have started a small art collection, buying works from two local artists. This most definitely fall into the category of ‘affordable art’, but I can’t imagine wanting to spend the same money on shares in a piece of art I would never get to display in my home or enjoy on a daily basis.
Investing through a public art index does have some advantages when compared to directly buying works of art. There are no worries about insurance or maintenance costs. The value of the art should be more accurately calculated and maintained, based on demand and the sale price achieved for comparable works of art at public auction.
However, as with all alternative investments, the issue of liquidity is still likely to pose some challenges.
Whilst I wish the A&F Markets art index every success and applaud this innovation, I would always rather enjoy direct ownership of art, even if it means restricting my collection to more affordable pieces.
Photo credit: Flickr/See-ming Lee 李思明 SML