Masterworks is opening the doors to top-tier, blue-chip art investments to everyone.
Why should I care?
Invest in blue-chip artwork
For the first time, you can purchase shares representing ownership of a painting similar to how you would purchase shares in a traditional company.
Masterworks are using a database of more than 1 million auction records to select artists that meet their investment objectives.
Invest in Fine Art
What’s going on?
Heading down to your local crafts store and buying a canvas, some paints, and an easel is one way to invest in art – but not the way 🎨
While art owners can’t trade paintings or sculptures like a stock or bond, art is an asset class unto itself. Investors typically describe assets like art as “alternative investments”: like an ugly duckling, they’re often ignored, but many still turn into beautiful investment swans.
Other alternative investments include real estate and typically high-risk hedge funds, crowdfunding, cryptocurrencies, private equity, and venture capital. But none of these are as aesthetically pleasing as the lie that makes us realize truth; after all, you can’t put bitcoin on your wall.
Why invest in art?
The short answer: diversification. The long answer: di-ver-si-fi-ca-tion.
A masterpiece of an investment portfolio should contain a wide selection of different assets (stocks, bonds, cash – and, yes, alternatives). The idea is that any losses in one area (say, stocks) should be offset by gains in others (bonds, for example).
The proportion of an investor’s portfolio that should be invested in art varies depending on individual investing goals and how much risk they’re willing or able to take.
According to the Wall Street Journal a few years ago, almost 8% of investors’ cash was held in “passion investments” like art. An economics professor noted for research that visualized artworks’ increasing value since 1875 believed that investing 10-20% of a portfolio in art was reasonable – but, as ever, it’s different (brush)strokes for different folks depending on individual circumstances.
Arty farty or arty smarty?
Art investors have a few ways to draw themselves into the market. They can buy artworks by relatively unknown, aspiring artists; classics by well-known, usually deceased, legends; or works by artists somewhere in between the two.
The barriers to investing in unknown artworks are relatively low, since it can be as simple as buying a friend’s piece or something you’ve taken a shine to at an art fair. In doing so, investors take on the risk of volatility, for better or worse: the price of the piece could rocket if its creator is discovered and critically lauded in the mainstream – or it could melt lower if the starving artist goes à rebours.
On the other hand, buying works by Old Masters or modern legends has historically been a trickier process, requiring investors to find their way into pretty exclusive auction houses – and shell out big bucks to get in on the action. Those that do, however, typically see the value of their artworks rise over time.