Every few months, it seems, a new art investment fund–or an announcement of one–pops up somewhere.
In October, for example, Berenberg Art Capital Fund opened for business in Jersey, U.K. with a plan to buy 200 old master, impressionist, modern and contemporary artworks. The minimum investment is 100,000 euros, and Americans can’t invest.
Another new art scheme, however, is aimed squarely at the U.S. market. St. Louis-based Liquid Rarity Exchange says it has patented a method for turning rare objects into publicly traded funds and is talking with New York investment houses about licensing that method to create a whole family of art and collectibles mutual funds, ETFs or indexes–a new “tangible asset class of securities.”
Liquid Rarity is generating buzz in part because investors are desperate for alternative asset classes to balance their holdings of stocks and bonds. Yet for all the hype, art is not an asset class, and art investment funds have so far attracted little cash.
In 2011 art funds pulled in only around $200 million in new money, with most of this going to funds in China, and ended the year with only $960 million in assets, Deloitte’s art and finance group reports. Artvest Partners, a New York firm that advises wealthy collectors, reckons the market is a bit bigger–more like $1.5 billion to $2 billion as of mid-2012.
Either way, art funds are not just insignificant compared with other financial markets but also a very small corner of the $67-billion-a-year fine art market. Worldwide fewer than 30 art funds are active today, and only a few have attracted more than $50 million in capital. Artvest principal Jeff Rabin estimates half of art funds that are announced never raise enough money to get off the ground.
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