Art Bankers Take Advantage of Falling Prices- artmarketblog.com
The 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.