Author: Media Office. This is Chiron. 27 November. 2009.
Dissatisfied with performance in the equity and bond markets, investors have tapped into “alternative asset classes” like hedge funds, real estate and private equity. Today, such investments are considered quite mainstream. Some investors are now hoping to find shelter in alternative investments such as fine art, wine, antique furniture and even stamps.
Is fine art a good investment?
On the surface, these alternative investments’ performances are alluring. Indices tracking the performance of high-class art have held up well in the recent economic slowdown, while art auction houses report record prices. Art as an object of investment has been debated for long. However, in the age of 20 percent returns on stock markets and a long bull market, the concept of art as an investment option was passed over. But the corporate scandals, poor stock market performance and low interest rates hanging overhead has prompted a revisit. In one of the most prominent examples of art investing, the British Rail pension fund in the 1970s invested 2.9 percent of its portfolio, or about 40 million, in ten different categories of fine art earning a return of 40 percent per annum above inflation until 1999. Ariel Salama, the Global Head of Private Banks at ABN AMRO, predicted in April 2005 that $30 billion of capital would move into art funds in the next ten years.
How does art fit in a portfolio?