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  • Artsy Investments

    Published Date : December 12, 2017

    Fancy owning art classics like Mona Lisa or Picasso paintings? Thanks to technology, you are a step closer to making that reality. With the emergence of an alternative investment vehicle called Art Investment Funds, you can now own a stake in fine arts and even earn significant returns from a beautiful piece of art.

    As per Art Funds Association, there are currently around 200 art investment funds in the world with approximately $3 billion in aggregate art investments. Since returns from art investments are not directly linked to external events, investing in such funds can provide decent returns even during recession. Mei/Moses All Art Index, which tracks the long-term performance of fine art, has shown that the art space outperformed stock markets during the 2001 recession. The compounded average returns generated from art funds has been around 33%, according to Bloomberg.

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    Multiple Fintechs are leveraging emerging technologies like Big Data to provide handsome returns to art fund investors. For example, American Fintech Arthena uses a data-driven approach to analyze innumerable attributes of art work like artist, art style, medium, size, etc. It also packs in ability to predict future price trends based on indicators like prices at public auctions, the number of gallery or museum exhibits, and frequency of an artist’s name coming up in databases or on social media. On the other hand, Magnus is digitizing the catalogue of every artwork to make the digital copies of fine art publicly available. Similarly, Artsy lists inventory from a global network of galleries and also live-streams auctions on smartphones and tablets.

    Even various dedicated exchanges have been set up to enable investments in art works. French company A&F Markets has set up the Art Exchange, the first stock exchange dedicated to art, where buyers can buy shares of art work for as low as €10. It works in a similar fashion as stock exchanges where orders are executed daily for matching orders, within a price limit fixed by the client. Similarly, Liquid Rarity Exchange has launched Liquid Rarity Funds that enable investors to securitize individual art works or groups of art works and buy or sell through shares, ETFs, mutual funds or indices.

    With the advancement in technology, art investing is now more accessible to the general public. However, considering lack of regulatory authority, opaque price discovery mechanisms, and subjective value and illiquid nature of fine art, it could be a while before art investments become mainstream.

    Credits : Akhil Handa, K Venketeswarlu, Manish Kulkarni

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