How to Invest in Art
🎓 Part 2 in our Alts Academy series
Hello everyone, and welcome to the second edition of Alts Academy 🎓
If you missed the first issue: Alts Academy - How to Invest in Short Term Rentals
Alts Academy gives you the A to Z of our favorite alternative investments. It's your playbook for alternative investing — how to start, what to do, where to look, how to win, etc.
Today, we're looking at how to invest in art. Regardless of your budget or portfolio size, we've got something for you.
Let’s get to it! 👇
Why invest in art
Every year, interest in (and therefore demand for) blue chip art grows.
New international spaces are opening, museum footfall is increasing, and more universities teach modern and contemporary fine art, with an ever-growing number of degrees.
What’s blue chip? Quality pieces supported by the largest private galleries that are held in international institutions' collections and have long auction histories.
Like Mayfair real estate, art tends to keep its value in bad times and rocket in value in good times. Of course, that isn’t a guarantee. Any good dealer will insist, even if you are motivated by resale potential, it’s best if you also love the artwork. That way, even if your investment doesn’t fare as well as you had hoped, you’re still left with a piece that you really enjoy.
What’s hot in art right now
Blue chip modern and contemporary prints/editions
Prints are one of the most underrated markets in the art world.
There is a misconception that prints are less important than other disciplines and are just an ‘entryway’ into the art market. In fact, signed, limited-edition prints are unique artworks carefully considered by the artist for the medium. They are signed off by the artist as a continuation of their practice and, as such, form a fraction of the whole artwork.
With prints, blue chip artists are where it’s at – those who achieve multi-millions for their unique works at auction.
But be aware that the primary market is risky, as the prints market is driven by supply and demand, which can be unpredictable. A limited-edition print’s performance can’t be judged until it starts to resell on the secondary market. Security grows as a history of sales drives prices due to increased scarcity and desirability/visibility.
Andy Warhol prints
Collectors often like iconic and popular repeat motifs like Andy Warhol.
A Marilyn painting sold this year for a record $195M: a repeat motif and one of, if not the, most iconic series in the world. The print is the perfect piece for an investor looking for a storage of value with excellent speculative price (Rally fractionalized one which Alts reviewed here).
People are drawn to young contemporary artists because you can buy a work for 10k, and see a similar piece by the same artist sell a year later for 150k.
There are big rewards to be had, but the risks are considerable.
First, it’s too early in the artist’s career to be considered blue chip and auction history is limited.
Second, if you buy a primary piece from a gallery and flip it into an auction, you’ll be blacklisted. Why? Because galleries have a vested interest in controlling the artist’s price and career trajectory and don't want you messing with it.
If you do go for young contemporary, these artists have a strong (though short) auction track record:
With any contemporary piece, you want to catch a great young artist at an exciting up-and-coming gallery and buy with a plan for a long-term hold. If the work does rocket in value and you want to sell, you can approach the gallery that sold you the work in the first place. They may offer to find a buyer on your behalf.
What might get hot next
Keith Haring prints
Basquiat, Haring, and Warhol were very close professionally and personally, and Haring’s $10k pieces may soon catch up with his counterparts nearer $100k.
Underrepresented and Female Artists
20th century British artists (particularly from underrepresented demographics) are still often hugely undervalued in the marketplace, despite their presence in the collections of some of the world’s greatest museums. This is changing right now. To maximize investment, I’d point a client to an easy win and to buy the best female and other underrepresented (yet established) artists as the art world readjusts to balance out years of prejudice.
A few examples of these artists who are long established:
With an ever dwindling supply of impressionist masterpieces, institutions are looking beyond Monet, Renoir, Cezanne and Degas to fill their expanding wall space.
A few key impressionists on their way up:
Camille Pissarro - the most sincere to the ideals and central driving force of the movement
Alfred Sisley - another artist who was there at the very beginning
Mary Cassatt - art spaces in the US are booming, and she was America’s greatest impressionist
How to invest in art
Investing in art is a journey you can choose to navigate yourself or ride along for. Below, we break down options for both the DIY’ers and those who’d like a helping hand.
Fractional Art Investing
Probably the easiest way to get started.
With fractional art platform Masterworks, you can invest in many of the artists mentioned above starting at $100, though the minimum initial investment to participate in initial offerings is $10k.
Masterworks purchases a piece of art, insures and stores it, registers it with the SEC, and breaks it into shares you can purchase. When a work of art is sold off the platform, you get a share of the profits.
There's also a secondary market if you want to take profits or diversify your holdings.
Masterworks charges fees, but I like how they simplify the process. Instead of facing a universe of potential investment opportunities, you're given a finite menu of pieces that have already been vetted.
With Mintus, there's a big focus on investor education, which many newbies will find helpful. Check out some of their recent pieces:
It's not live yet, but Mintus has a secondary market on the roadmap as well, so you'll be able to trade your shares there once it goes live.
Self Directed Art Investing
Where to buy your art
Auction houses are often the best way to secure a specific desired piece, but they’re very expensive, charging fees upward of 25% to both the buyer and the seller.
Galleries are a better route, but they have large retail overheads and robust art fair fees, which can make them costly.
The best option is to work with an experienced art broker. A broker gives you a bespoke service and expert guidance while also saving commission, so you’ll be paying considerably less than the options above. Brokers will also source options for you through their dealer network and can make value and condition judgements on your behalf.
We use a broker to purchase the pieces in our ALTS 1 fund.
The best way to get your eye in is to see lots of art, and talk to gallery owners about the artists you like most. Don’t be afraid to ask lots of questions and don’t be afraid to ask how much each work is. Then visit their actual gallery and join their mailing list.
How to track your art
Our ALTS 1 Fund owns three pieces of physical art: one each from Bridget Riley, Frank Auerbach, and Damien Hirst. We store them in a friendly gallery in London, but we use specialised software called Artscapy to keep track of our collection and show it off.
The free version of the software offers plenty of collection analytics including impressive pie charts and valuation graphs.
Because we do all our own valuations and have our own insurance, we don't pay for their premium plans. But if you're a normal human being instead of a fund, you can pay $35 for automatic valuations. Insurance is also included on purchases of art on Artscapy's marketplace.
Artscapy also features a marketplace where members can buy and sell their artwork. The selection is impressive given how young the platform is. At a quick glance, I spotted pieces by Bridget Riley, Andy Warhol, Damien Hirst, Banksy, Keith Haring, David Hockney, Jean-Michel Basquiat, George Condo, and Yoshitomo Nara.
Artscapy (even the free version) is a big upgrade over tracking your art collection in a spreadsheet, notebook, or your brain. Give it a go.
Which art to invest in on any budget
Less than $1000
The most affordable prints by blue chip artists are just about available on the secondary market. You can also sit through online auctions and grab anything which slips between the cracks, but at this price point the primary market is probably your best bet.
There are many companies, institutions, and individual artists who publish prints and if this interests you it’s worth subscribing to their news so you are notified pre-drop.
Here are some of my favorites:
Counter editions (scroll to the bottom)
Tate Shop (scroll to the bottom)
$1,000 - $10,000
Unique work on canvas
This is a bracket more for a client who is a collector rather than an investor.
At this level, you can start to look at blue artists like Pablo Picasso.
They’ve shown steady growth over the last decade and are an excellent investment for long term potential and safe storage of wealth. The more affordable level of his print market also becomes attainable at this price bracket.
Alternatively you could look at pieces by Jenny Saville, Michael Craig Martin, Barbara Kruger (also), Cornelia Parker (also), Tracey Emin and Louise Bourgeois: all excellent long term investments at every level.
If photos are your thing, fine art from the school born out of Bernd and Hilla Becher at the Kunstakademie Düsseldorf is a great bet. This includes Thomas Ruff, Thomas Demand, Thomas Struth, Andreas Gursky and Candida Höfe.
$10,000 to $100,000
Unique Work On Canvas
There are lots of options here. At the lower end, around $30,000-50,000, you could afford the best work from an exciting young artist who is breaking through and gaining a reputation.
At the higher end, you can acquire the best piece from a mid-career artist who has established early blue chip credentials.
Or, you could try and get your hands on an average work from a fully established blue chip artist.
Unique works on paper
You can get a watercolor from J.M.W.Turner at this price point. A very secure investment!
At the lower end of the price bracket, you could search for an entry level Warhol piece with huge potential upside as tastes evolve. Or, at the top end of the price bracket, a mid-level piece Warhol piece that’s already better-established.
$100,000 to $1,000,000
Unique Works On Canvas
On the primary market you could expect to acquire the best work from a young artist who looks to be on their way to being established and who are already represented by a major private gallery.
Or, consider this L.S. Lowry, which I’m sure will be sought after by a major museum in the future.
Likewise the under-appreciated impressionist Sisley.
A lot of the secondary market at this level is behind closed doors and I’d strongly advise you to work with a broker to help you find options before investing.
Unique Works on Paper
Bridget Riley works on paper are very attractive right now to investors. She was the most famous artist from the Op Art movement and her market is readjusting fast.
Likewise two other undervalued female artists:
Barbara Hepworth is widely considered one of the most important female artists of the 20th Century.
Yayoi Kusama is likely to be viewed as one of the greatest of her generation and I’d definitely advise you to invest in her at as high a level as you can afford.
Only the most elite artist editions break into this category.
Here you’ll find the most desirable pieces by renowned blue chip artists.
You can also find excellent examples of small edition sculptures and ceramics.
Unique Works on Canvas
Only apex blue chip artists have broken the ceiling beyond $20m.
At the lower end, investors are trying to buy the best and most iconic pieces by who they think will be the next artist to join the $10 million+ club.
Quality pieces are hard to find without help, but look out for potential candidates such as Bridget Riley, Frank Auerbach, Jenny Saville, Artemisia Gentileschi, Alfred Sisley, and Ed Ruscha.
Unique Works On Paper
Beyond something on a Leonardo Da Vinci or Picasso tier, I wouldn’t recommend investing at this level. I might be wrong but I think pieces like this by Basquiat must be near their ceiling.
This is the peak of the print market, only the best pieces by the most desirable artists like Picasso. I’d encourage an investor to try and get the full suite of the best Warhol prints. A small edition sculpture by Louise Bourgeois is also a great acquisition.
The small print
Art is a wise investment, if you buy quality. Discuss your tastes and what you’re looking for with your broker, allowing them to compile a bespoke variety of options at different price points. They’ll want you to find the perfect piece; something with potential and security, but also that you’re really happy to own. They will be able to source works using their dealer network, saving you the hassle of liaising with galleries and auction houses, and they can advise you by comparing pieces with other examples they have seen throughout their career.
Our ALTS 1 fund owns works by Bridget Riley and Frank Auerbach.
That's all for today. Hope you found this useful.
What did we miss? What alternative investment do you want to read about next time?
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