Art: The ultimate alternative investment, now more accessible

July 13, 2019 | Alternative Investments
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Art is often called the ultimate alternative investment because it is completely uncorrelated to traditional markets such as stocks

Is art an alternative investment? Yes, and it is a great one as well.

Consider this: If 18 years ago, you invested in an art portfolio that mimicked the ArtPrice 100, the art index which considers the most significant artists selling on auction, your portfolio would have outperformed the S&P 500 by a solid 250%.

More recently, in 2018, while the S&P 500 declined by 5.1%, the art market gained 10.6%. The Wall Street Journal ranked art as one of the best investments of 2018, alongside wine and cars.

The democratization of investing in art

You might have been rejecting art as a viable investment option because of the opacity of the art market and the difficulty of actually making an investment. But things are changing.

Technology such as the blockchain is helping to record the ownership of art and prove its authenticity. Price dissemination of art is now more transparent with widespread reporting on the Internet.

For example, artnet.com is a widely-used database of art prices.

MASTERWORKS is shaping to be the first investment platform for fine art, allowing investors to purchase interests (or shares) in a painting similar to the way investors purchase shares in public companies.

And…they’re not making any more of it!

Think of it this way. Top-notch artists and the best-performing companies are both blue-chips, with high liquidity and price growth.

But there are no longer any new works coming from masters such as Da Vinci and Picasso.

Reason enough to consider art as portfolio diversification, one that could be extremely lucrative over the long term.

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