Investment in art is a popular option for collectors. However, all the experts agree that seeking knowledgeable advice is the first important step to take.
Frequently making the headlines are the stories of huge sums paid for fine art at the leading auction houses. Also frequently linked to this are the stories of the great financial gain made by the vendor. Less publicised but more common are the stories of major losses through lack of expertise or simply bad luck. Although investing in art can pay handsome dividends, art as an investment has to be approached with extreme caution.
Stories of fakes and the discovery of genuine masterpieces have made popular viewing for BBC TV’s Fake or Fortune? An investigative series fronted by Fiona Bruce and Philip Mould who have put under the microscope paintings by Monet, Winslow Homer, Han van Meegeren, Vuillard, and Chagall, amongst others. Top tips are given for hunting down a sleeper—a painting or object that passes miscatalogued through the auction rooms into the hands of someone who knows (or at least suspects) its real identity.
A fascinating insight is given into the scientific methods used to help identify genuine masterpieces. However, the underlying message is ‘caveat emptor’.
Whilst the experienced art investor may go it alone, those with little or no experience are well advised to take advice. There are several reliable options. Sotheby’s for example will give advice on starting a collection, although that advice is unlikely to extend to any investment guidance. Financial consultants, Deloitte, on the other hand, will provide intelligence on art as an asset class, as well as art-related advisory services to individuals, institutions and advisors that own or manage art assets worldwide.
Fake or fortune?
This global organisations tells us: ‘We work closely with academic and professional experts who are at the top of research in art valuation and in the study of art as a financial investment, such as the Maastricht University, ArtTactic, ArtInsight, Mei Moses founders, Sotheby’s Institute, etc. Our intent is to monitor and create awareness of art as an asset class. In this context, we organize each year the Deloitte Art & Finance Conference that addresses the business opportunities art and collectible assets could generate.’
For many collectors, Deloitte’s message sounds reassuring: ‘ … there is a significant opportunity to integrate the concept of collectible assets in wealth management.’
On September 18, Deloitte will run its 7th Art & Finance conference in Luxembourg, covering the following topics:
Presentation of the Luxembourg Freeport
Opportunities for financial players: wealth managers, Family offices, insurance companies, custodian banks, etc
Operators of Luxembourg Freeport: Who are they? What do they offer?
Cargolux: How it increases the Freeport value proposition for financial & Art stakeholders
Custom aspects of the Luxembourg Freeport
Tax aspects of the Luxembourg Freeport
Key insights of Deloitte/ArtTactic Art & Finance report 2014
Transformation of the global art market: How Luxembourg can benefit of it?
Luxembourg Freeport refers to a new Deloitte initiative which will be a duty-free and tax-free warehouse where valuable assets such as fine wine, artworks, jewellery, precious metals, etc., can be stored in a state-of-the-art environment for an unlimited period of time. The initiative is backed by the Luxembourg government which actively supports any initiative that can contribute to create an Art & Finance cluster in Luxembourg. Deloitte’s new facility is expected to open for business in Q3 2014.
For those collectors and would be investors who want to make further investigations into the asset option, a new book by art expert Melanie Gerlis will be of interest.
Art as an Investment? A Survey of Comparative Assets (2014) is aimed at collectors and investors, this user-friendly guide explains art’s value as an asset through comparisons with more familiar investments, including property, shares and gold. It draws on extensive research and interviews with key players in these other markets, as well as the author’s own experience, to clarify the specifics of art as an asset class.
Gerlis also looks at considers the growing importance attributed to art as an investment, testing the validity of claims about art’s capacity to generate returns that outweigh its risks. It offers jargon-free explanations of how the characteristics of blue-chip art can be seen to coincide with and diverge from the fundamental features of more established types of asset. Key issues addressed include the role of subjectivity in the perception of value; the failure of attempts to establish stock markets for art; the risks and shortcomings of art funds; banks’ reluctance to lend against art; and the art world’s distaste for selling and speculation.