Art Collecting Commentary

Impressionist and Modern sales were held this week in London with strong results. Sotheby’s ended with $157,543,910 in sales and Christie’s ended at $227,111,142. The stars of both nights were artists we currently sell. Pablo Picasso’s “Couple le Baiser” went for $10,621,070 which is 18 times higher than its previously recorded auction in 1993. Meanwhile, Picasso’s “Homme a la Pipe et Nu Couche” sold for $7,800,591.  Lastly, Picasso’s “Jeune Fille Endormie” and “Femme Assise, Robe Bleue” respectively sold for $21,866,588 and $29,133,148.

Joan Miró’s abstraction “Femme a la Voix de Rossignol dans la Nuit” sold for $7,709,608 while Henri de Toulouse-Lautrec’s “La Liseuse” sold for $9,165,339. “l’Empire des Lumieres,”  by René Magritte went for $3,888,313 and Pierre-Auguste Renoir’s widely exhibited “La Source (Nu Allonge)” sold for $8,241,788.

European buyers have been dominating the sales, but U.S. buyers have made an impact as well. This only goes to show that art is a great investment at any price level, in any country. With the steady return of good sales, art is stronger than it has been in quite while.

There is an interesting topic taking hold in the art world that has people talking and it centers around the global trend of creating Art Investment Funds. These art funds allow for individuals to make long-term investments in a portfolio of valuable artworks. What this means is that an art investment company either
a) buys particular works of art upfront whose value they believe will rise and then allows individuals to invest in the created portfolio and then upon selling the works of art will get a return OR
b) lines up individuals who put money towards purchasing art for a portfolio as an investment on the assumption that the value will increase and then upon selling the works of art will get a return.
All in all, they aim to maximize the rate of return on works in their collection.

There are many different options available besides these two but they are the most popular, as London-based Fine Art Fund displays. Fine Art Fund was the first fund of its type to invest in art as a worldwide asset class, and continues to be the only one to do so on a major international scale. However their creation is gaining in popularity as can be seen with several companies in several different countries taking a similar approach to the art market.

In Brazil, Plural Capital is an investment firm based in Rio de Janeiro and São Paulo that has launched BGA Private Equity Investment Fund. This new art-fueled market venture is worth $24 million and the strategy is to buy contemporary works, mainly from Brazil, for three years, and then spend two years selling off the art it has purchased. Therefore it encourages private investors to use the contemporary art market as a financial instrument.

Russia provides another example as to this sort of investment gaining popularity, but with a twist. One art investment firm, Atlanta Art, is valued at $4.7 million and just began trading last month. But it is Sobranie.Photoeffect valued at $467 million that is has a twist in their investment plan. What makes Sobranie.Photoeffect different is that instead of raising money from wealthy individuals to buy art, it has obtained its works from a group of anonymous Russian collectors. The plan for the fund is to sell five to 10 percent of its stock at auction every year, paying its final dividends after 15 years and then ceasing to exist. Sobranie.Photoeffect deals exclusively with photographs and holds over 290,000 original prints.

Russia and Brazil are not the only examples of art investment funds, but France and China offer different variations. In China, a financial corporation has gone public with China’s first openly traded art portfolio, on the Shenzhen Cultural Assets and Equity Exchange (SZCAEE). Issued by the Shenzhen Artvip Cultural Corporation, the art portfolio comprises 12 paintings by contemporary artist Yang Peijiang in the form of 1,000 shares, which sold out on the first day of trading, netting $354,480. As the artworks are traded by Artvip, which is managing the 12 works, profits are dispersed to shareholders. The Exchange itself is interesting as it was established in 2009 by the Chinese government, but functions as an alternative platform for the trading of a wide range of cultural assets — including artworks, luxury goods, and films — as part of the Chinese government’s attempt to commercialize, diversify, and regulate the public exchange of such cultural properties.

Meanwhile in France, the French company A&F Markets has come up with a venture called Art Exchange that will treat artworks as investment vehicles, opening them up to partial purchase by shareholders. The initiative has just launched with an offer of shares in two pieces, one by Sol LeWitt and the other by Francesco Vezzoli. Now 11,000 shares of LeWitt’s “Irregular Form” are available at $13 per share, for a total value of $142,000 and 13,500 shares of Vezzoli’s “The Premiere of a Play That Will Never Run” are also offered at the same rate, giving it a total price of $174,000.

What does an art investment fund do for you? Well it provides those who cannot afford to buy expensive works of art an avenue for reaping a profit off of the art, as well as provides new buyers with an “in” into the art world. In two of the examples listed above, shareholders are even able to have the piece on display in their home on a loan so to say. Thus, in addition to sharing the potential appreciation and profits of the artwork, the artwork is being admired and enjoyed as well.