Art Bankers Take Advantage of Falling Prices- artmarketblog.com

Art Bankers Take Advantage of Falling Prices- artmarketblog.com

falling pricesThe interest in structured art investment programs has continued to remain relatively high considering the recent concerns voiced by some regarding the state of the art market. Since the beginning of the year there have been several new art investment programs launched which suggests that the categorisation of art as an asset class has not been damaged by the recent market jitters. In fact, with plenty of bargains up for grabs there is probably no better time for art investment funds to be buying works.

The most significant of the new programs is the so called “Collection of Modern Art Fund” which is a product of the UK based Castlestone Management, a privately owned independent fund manager. According to the fund website (http://www.collectionofmodernart.co.uk) “Collection of Modern’s Art’s investment philosophy is focused on building a diversified portfolio of artists to provide medium to long-term appreciation based on thorough research and the proven strength of the market for these artists. The portfolio composition is a key component to ensuring the returns of the fund are in line with the market. With this achieved, the fund can act as a real asset, increasing in value with money supply and inflation and thus providing an inflation hedge. In the initial selection process, the manager aims to identify works of art for the portfolio that broadly represent the Art Market Research 100 index”

The second major art investment program to be launched is a collaboration between the China Merchants Bank and the China Contemporary Art Foundation. China Merchants Bank (CMB) have taken what is a slightly different approach to art banking by offering their clients the opportunity to put down a deposit on a work of art chosen a group of experts and take possession of the work of art for a period of twelve months. If after the twelve month period the client decides that they want to purchase the work of art they can do so or if they do not want to purchase it they can return it and receive a full refund. According to one of the bank’s representatives who was interviewed by the People’s Daily Online Newspaper, “Some banks hire art investment consultant and bring clients’ money to auction house. We are not doing that, because it easily slips out of control. We offer free transportation and as long as the artwork is well preserved, our clients will at least break-even”

Adding to the options for keen art fund investors is Phillip Hoffman’s The Fine Art Fund Group Ltd (http://www.thefineartfund.com/) who have indicated at the beginning of the year that they would be starting a new fund to take advantage of the fall in price of many works of art. Since the beginning of the year Hoffman has further indicated his intentions to raise $100 million dollars of the next year to purchase works from private and institutional collections that are up for sale. According to a report from the Financial Times, the group is currently looking at purchasing two major art collections one of which is owned by a Spanish bank and the other by a manufacturer. After postponing their plans for a dedicated Indian art fund creatively titled the Indian Fine Art Fund due to the current instability of the market for Indian art, it is good to see this new initiative from Hoffman.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

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Investing in Social Art Projects – artmarketblog.com

Investing in Social Art Projects – artmarketblog.com

Trust Art artist Jason Eppink

Trust Art artist Jason Eppink

A new project called Trust Art (http://www.trustart.org) which is described as “A stock market for cultural renewal” has recently been launched by the founders of Fame Game (http://www.famegame.com). According to the Fame Game website “FAME GAME is a rapidly-growing website that maps and analyzes your social connections and media attention to help you promote meaningful ideas, people, and organizations in culture. FAME GAME creates public-facing “social network” profiles for the 150,000+ most visible players in the New York media based on their cultural footprint”. The Fame Game mission is to mission to figure out how these players work together in the real world, and bring that model online which can then be used to give emerging artists, business leaders and personalities information about the way people use their fame to get attention for the things that they care about. The driving force of Fame Game and also of Trust Art is the concept of Social Capital which is defined as the pattern and intensity of networks among people and the shared values which arise from those networks.

The Trust Art project is a sort of interactive art fund that gives people the opportunity to invest their money in one of ten social art projects by ten different artists. Shares in each of the projects are available for $1 each with a minimum investment of $1 and no maximum investment although I presume that the most money anyone would want to invest would be the total cost of the project. The money invested goes towards the completion of the project as outlined by the artist on the Trust Art website. Once the project is completed, the finished work is auctioned off and the proceeds are split 50/50 between the artist and the share holders. All investors are encouraged to promote the project that they have invested in so that more people invest money and so that the project receives media attention and becomes more popular. The idea behind the promotion side of the concept is that promoting the project and increasing it’s popularity will increase it’s value and the return to shareholders once the work is auctioned off.

The biggest problem that I can see with the whole Trust Art concept is the works of art themselves which are not exactly what one would consider to be investment grade works of art. Each of the ten proposed works are more what I would call conceptual installations that are the sort of works people go to see at museums or at public galleries and not the sort of works that people invest in. As an example, one of the artists, Facundo Newbery, will construct a self-sufficient home solely out of garbage and shipping containers collected from the streets of Brooklyn. Throughout the project and after its completion, Facundo will offer a transparent look into his techniques for recycling urban waste so that others may do the same. The object (auction artifact) that will be auctioned is listed as a handmade home in the tropics which doesn’t really seem like something that many people would be interested in purchasing. Other “auction artifacts” include a dance performance, a video installation, 5 photographic portraits, an antique fountain repurposed to flow with perfumed water and an original building facade reimagined by street artists. The other problem with the project is that the artists themselves aren’t really all that well known but I suppose the purpose of the site is to enlist the help of the investors to make the artists and their work well known.

Of all the projects the most viable, most tangible and most investment worthy is “The Documentary Starring Everyone in the World” by Jason Eppink. According to the Trust Art website “Jason will collect and assemble an extensive photographic database, the contents of which resemble the age and appearance of the world’s 6 billion people. The images are then assembled into a documentary that plays 9 images per frame and runs over the course of two and a half weeks in various global locations” The object that will be auctioned is a video installation representing 6.7 billion people. Several of Eppink’s past projects such as “Pixelator” and “Take a Seat” have been very successful and received plenty of press attention which is a good sign for potential investors. You can see more of Jason Eppink’s work at http://www.jasoneppink.com

For more information on the Trust Art project visit http://www.trustart.org

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.

Osian’s Art Fund Emerges as High Yielding Asset Class in Global Meltdown – artmarketblog.com

Osian’s Art Fund Emerges as High Yielding Asset Class in Global Meltdown – artmarketblog.com

Osian’s, today presented the 5th Six Monthly Disclosure Report (10 July 2008 – 9 January 2009) on behalf of the privately placed closed-ended Osian’s Art Fund (OAF). The Report establishes that the Osian’s Art Fund is one of the few investments providing a positive rate of return, more than 10.59% CAGR (post taxes) over the last 30 months, holding its own with relative stability, during the worse financial meltdown in global history.

In the current scenario, while Gold has emerged as the highest yielding asset class providing over 12.47% CAGR, followed by Debt Fund at 10.98% CAGR, the Osian’s Art Fund is only marginally behind (refer Attachment 1). The credibility of well managed, high quality art as an asset, for serious institutional investments, has now clearly emerged.

Mr. Neville Tuli, Founder-Chairman, Osian’s, said, “Today, we are close to achieving our first integrated global platform whereby the dual responsibilities of building great knowledge bases hand in hand with creating systematic wealth can be united on sustainable, accountable and transparent platforms. It will always be work in progress but the proximity of the bridge-building exercise is now clear for most to see.”

The Osian’s Art Fund, set up under the Indian Trusts Act, launched its first privately placed scheme Contemporary-1 on 10 July 2006, raising a corpus of Rs. 102.4 Cr. The Fund, a close-ended scheme with a lock in period of 36 months was open to investors only by private placement and the minimum investment was Rs.10 lac and then in multiples of Rs.5 lac.

The Fund attracted 656 investors from all over India. The top 10 cities from which the highest Osian’s client response was received were Delhi NCR (31.4%) followed by Mumbai (27.1), Kolkata (10.2%), Bangalore (8.8%), Chennai (7.9%), Hyderabad (3.9%), Surat (2.2%), Baroda (1.7%), Pune (0.9%) & Ahmedabad (0.8%). In totality, the Osian’s client base extended to 39 towns & cities, showing the national scale reach and interest. Out of the total number of investors about 82.72% had ventured into the area of investment in art for the very first time, though they were aware of Osian’s as an Auction House and Archive. Also, out of the total number of investors, 82.75% are individuals, 10.07 % are corporates and 7.18% are firms.

The Fund (as on 9 Jan 2009) has invested in a number of artists with a very well diversified portfolio based on their historical significance. These include the Progressive Artists Group (PAG) (20.92%), a Focus on Abstraction (17.20%), Calcutta Group & Painters (16.74%), a Figurative Focus (non PAG) (15.22%), Contemporary Art (8.33%), a Figurative Focus (Bengal) (6.17%), Cholamandal Artists (4.05%), a Figurative Focus (Delhi) (2.96%), Sculpture (2.78%), National Art Treasures (1.54%), Baroda School (1.11%) and Others (2.97%) (refer Attachment 2) V.S. Gaitonde, M.F. Husain & Akbar Padamsee are the three leading artists with the largest allocation.

High quality Indian art is more and more being seen as a credible asset, with many advantages over other assets. The Auction Sales turnover has taken a great leap from INR 133 millions in 1999 to INR 5527 millions in 2008, having achieved a growth of 51.26% CAGR.

**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.