Although a number of investment houses have moved to tap interest in art investment, a firm that is launching a new fund says there remains plenty of additional capacity in this market before reaching a limit.

Anthea Art Investments intends to launch the Anthea 1 Contemporary Art Investment Fund, making it the first closed-end art fund to be authorised by the Irish Financial Services Regulatory Authority. The fund will focus entirely on artworks from 1945 to the present day and is targeting at least €30-40 million at launch. 

“It is estimated that the total size of the art market amounts to roughly $65 billion and as such I believe the market is big enough to allow efficiently the entrance of a number of players in the years to come,” Massimiliano Subba, Managing Partner of Anthea Art Investments, a firm based in Zug, Switzerland, told WealthBriefing in a recent emailed interview. Mr Subba created the business after leaving Commerzbank in 2007.

He reckons there are about 40 funds operating in this market worldwide but many of these vehicles, set in lightly regulated jurisdictions, should be seen more as “club investors” than proper investment funds, Mr Subba said.

“To some extent this may have inhibited the development of art investment funds so far as investors consider these structures pretty opaque and not transparent,” he said.

1 2 3 4 Next Page

To comment on or post a blog on this subject, please click here

People who read this also read

• PKB Privatbank In Exclusive Talks To Acquire Another Swiss Private Bank

• Baring Launches Asia Strategic Fund
• Green Manager Launches Water Fund
• JP Morgan Adds to Wachovia Managed Account Platform

Although a number of investment houses have moved to tap interest in art investment, a firm that is launching a new fund says there remains plenty of additional capacity in this market before reaching a limit.

Anthea Art Investments intends to launch the Anthea 1 Contemporary Art Investment Fund, making it the first closed-end art fund to be authorised by the Irish Financial Services Regulatory Authority. The fund will focus entirely on artworks from 1945 to the present day and is targeting at least €30-40 million at launch. 

“It is estimated that the total size of the art market amounts to roughly $65 billion and as such I believe the market is big enough to allow efficiently the entrance of a number of players in the years to come,” Massimiliano Subba, Managing Partner of Anthea Art Investments, a firm based in Zug, Switzerland, told WealthBriefing in a recent emailed interview. Mr Subba created the business after leaving Commerzbank in 2007.

He reckons there are about 40 funds operating in this market worldwide but many of these vehicles, set in lightly regulated jurisdictions, should be seen more as “club investors” than proper investment funds, Mr Subba said.

“To some extent this may have inhibited the development of art investment funds so far as investors consider these structures pretty opaque and not transparent,” he said.

“Long term lock up of art investment funds still make some investors raise their eyebrows, but since the average investment allocation to this kind of investment should represent between 3 and 5 per cent of the total investment portfolio a longer lock up should not concern them excessively,” Mr Subba said.

As Randall Willette, managing director of Fine Art Wealth Management, recently argued in this publication, there are signs of a revival in the art market, and Mr Willette cited Mr Subba’s own fund launch as an example of improving investor sentiment. (To view Mr Willette's article, click here).

The Anthea fund will invest around 70 per cent of its portfolio in works by such established artists as Jeff Koons, Jean-Michel Basquiat and Frank Stella, with up to 20-25 per cent of the portfolio to be used to acqure iconic pieces that have particular historical or cultural value or are especially fine examples of an established artist's work.

Around 10 per cent of the portfolio will focus on successful artists from emerging economies, and roughly 2 per cent will be invested in works by emerging artists. The remaining 18 per cent or so will be used to make price arbitrage investments by picking up artworks below market value via distressed situations and art auctions, he said.

“I believe there are several reasons to explain current interest to invest in art. Surely art has recently been demonstrated to be a good refuge asset in times of wealth destruction. According to the Mei&Moses 2009 year-end report, the performance of their All Art Index reported a fourth quarter rebound of +13.1 per cent which boosted the index from an intra year low of -36.6 per cent to final 2009 performance of -23.5 per cent," he continued.

“If you compare these figures with the market correction which occurred on a wider spectrum of asset classes you can consider art as a safe harbour in times of market turmoil,” Mr Subba said.

He points out that the latest Merrill Lynch/Capgemini World Wealth Report highlighted that Fine Art was the primary passion investment for Ultra-HNW individuals in 2008 (27 per cent of their total passion investments), and was the second-largest (25 per cent) for HNW individuals.

There are, however, risks in art: the sector has not been immune to the chillier economic climate, he cautions.

“Buying art for investment purposes is pretty different from buying it just for pure interior design. In the first instance your budget will probably be much higher and if you aim to build up a well diversified art portfolio, which should include at least two or three pieces from well established artists and possibly five to ten pieces of emerging artists - probably you are talking about €3 to €5 million investment,” he said.

“To this extent, you may either do it through a fund which relies on the wise and knowledgeable advice of professional art advisors who can address the investment choice effectively, or you have the DIY alternative which further than being more risky, it takes time to understand the market, get to know people, browsing galleries, etc,” Mr Subba said.

“Investing in art through an art fund also allows you to get access to a well diversified portfolio of art works with a much smaller investment compared to what you need to build up your own collection,” he said.      

In explaining the mechanics of the new fund, Mr Subba said that Anthea I CAIF will invest roughly 90 per cent of its portfolio in established artists sourced from Europe and US. A remaining 10 per cent will be invested in artists from what we call “new economies” or Brics, as these countries will see stronger local art markets.

“I believe that art has a strong potential to become a mainstream investment asset not only for private investors but also for institutional, but in order for this to happen we need the art funds sector to develop further and welcome the entrance of a number of well structured players into the market,” Mr Subba added.

Rate this article