Investing in an art fund is different to buying art for yourself
An key point to understand when considering investing in art is that buying art to put on your wall is very different from investing in an art fund. True, many funds will give you access to the work held by the fund – some may even allow you to put it on your wall for a time – but the primary driver behind the fund’s purchasing decisions will never be whether it will go with your interior décor or even whether it’s the kind of work you would like to look at every day. The key point is whether the work will bring the fund’s investors good returns.
It’s a distinction that Massimiliano Subba, managing director of Anthea Art Investments, often finds himself making. Anthea’s Contemporary Art Investment Fund (Anthea – CAIF) is billed as: “an innovative investment opportunity to achieve superior long-term capital appreciation through investments in Post War and Contemporary art works whose potential growth in value is still unexpressed.”
Although art funds are an increasingly common form of investment, Subba still finds it necessary to explain how the concept differs from regular art collecting.
“Sometimes when you speak to investors and tell them you are an art fund, they say, ‘I can do that myself and I can even enjoy the painting but putting it in my living room,’ he says.
“Buying work for your home is a completely different story, just as buying a house to live in is different from investing in property. If you want to buy something beautiful for your living room, just buy it and do it. But this is not an alternative to investing in an art fund.”
He says that a key difference is the level of skill, the years of experience and the in-depth market knowledge that goes into Anthea’s purchasing decisions. By keeping its field of investment only within the Post War & Contemporary art segment, the fund can maximise on these skills and target an area with great potential for impressive returns.
“We only focus on contemporary art, and we invest in both emerging and established artists. Our investment strategy is very clear: we buy art from artists where we think there is potential for substantial increase in value in the next four to six years. If an investor wants to buy art and flip it the day after for a 20% return, that’s not our strategy.”
He says that the fund attracts people whose idea of investment sits comfortably with this strategy.
“Some of our investors have increased their initial subscriptions, simply because they are comfortable with our investment strategy and come up to the conclusion that the DIY alternative is far more demanding in term of time and effort” he says.
While investors benefit from the expertise of Anthea’s management team and art specialists and therefor do not need any specialist art knowledge themselves, Subba believes that art enthusiasts are especially likely to be attracted to this form of investment.
“The investors may or may not be directly collectors for themselves but they have an understanding of the art market dynamics, and that helps.”
When choosing an art fund to invest in, Subba recommends careful research, especially surrounding the qualifications of those running the fund and the art specialist team.
“Ideally this is not people coming from an art dealership background but rather art curators who in the course of their career had the possibility to witness the life cycle of a number of artists as such are in the best position to recognize upcoming and growing trends.
“At the end of the day much it’s about the people involved in the sourcing and selection of the artists and artworks. Their ability to use preferred acquisition channels and most importantly recognize the “quality” of the artwork which is what will trigger the increase in value.”