Why Art Deserves a Place in Every Portfolio

Should you make art part of your investment portfolio?

As investors move towards a more holistic wealth management model, diversifying client portfolios with art-related assets is on the rise and adding up, with total U.S. investment in art expected to reach $2.7 trillion by 2026, according to Deloitte's 2017 Art & Finance Report.

Although the art market is starkly different from more traditional asset classes, there's money to be made for those willing to invest.

Although the art market is starkly different from more traditional asset classes, there's money to be made for those willing to invest. According to the 2018 Art 100 Index by Art Market Research, art achieved a 10.6% return in 2018, outpacing all other categories. 

Is art a good investment?

Art makes good sense as an investment, and most wealth managers agree. In fact, 88% of wealth managers think that art should be a wealth offering. However, only 11% of wealth managers surveyed offer an art investment fund product in-house. This is in part due to the lack of transparency of the art market. 

But, times are changing, and so is the opportunity to invest in art. Here’s what anyone considering adding art as an investment should know.  

Art can protect assets amidst economic woes. Between 1974 and 1981, the British Rail Pension Fund invested roughly 3 percent of its holding, or about $70 million, into fine art and collectibles in an effort to diversify its portfolio and hedge against inflation. It did so successfully, strategically buying and selling artwork, generating as much as $65.6 million in just one night in 1989 (in addition to $48 million in previous sales). More than three decades later, the risk associated with traditional assets, per the S&P 500 bond index, is enhancing art’s appeal as an investment, which can offer stability in the case of an economic downturn. 

Art can protect assets amidst economic woes.

But not all art is the same. Generally speaking, old-world art is the safest bet while trendier modern-day works...

Keep reading on Quick and Dirty Tips