However, there are multiple barriers to a fund making a decent return. Firstly, many art investment funds charge hefty management, storage, and insurance fees that can eat into your profits. Having control of a physical asset may be an advantage but storing and insuring artwork is expensive. An art fund will find that these and further management costs eat into any possible returns. They fail where other forms of art investment succeed partly due to the overheads required.
Secondly, art is not a liquid asset compared to other forms of investing. The buying or selling of some investment vehicles is practically instantaneous, but selling art takes time, effort, planning and often a further fee. Art is not liquid enough to produce the sort of returns that investors want – especially when it is tied to a particular time frame, which funds nearly always are.
Even if you’ve done everything right, there is no guarantee every piece in your collection will be worth more than you paid for it when it comes time to sell. The art world is a strange place where new or established artists can quickly fall out of favour.
Thirdly, the main barrier to successful investment in the art world is a lack of knowledge. To invest in the stock market, you research the company of the stock you want to buy and look at earnings reports. When investing in art, to get yourself to the point where you are making competent choices, a lot of esoteric knowledge is required. It is the perfect example of where a little knowledge is a dangerous thing.
There are many involved who know enough to feel like they are making informed choices, but not enough to know that they’re not. To be able to assess what is going to be of significance in the future, a visceral, in depth, practical understanding is required. And a hell of a lot of time looking.
One solution is proposed by Atelier, a new members club and way of investing in art that offers expertise and education while at the same time removing many of the financial barriers to successful art investment.
Atelier has two distinct offers – the Atelier member’s club delivers credible contemporary art for you to enjoy at home – replacing the artwork every month or two. Members enjoy a variety of artists, styles and subjects, enabling them to learn about art.
This is a good introduction for those who are planning to collect art but don’t know where to start, and ultimately, reducing art to a transaction misses the point of collecting.
It is important that aesthetic appreciation and education are part of the process. Instead of committing a lot of money into buying one painting and then regretting their decision, members can enjoy a variety of artworks and learn what works.
Secondly, Atelier have a clearly defined collection strategy, focusing on emerging and newly established artists who have already begun to see interest from credible curators and collections, so if you wish to invest straight away, then Atelier brings the shared economy into the art world and offers a smart art investment model.
They acquire artworks for you, putting together a bespoke collection and add them to the Atelier Collection to be rotated among the Atelier members. In return, they pay you annual rental fees, so not only are you investing in art which will hopefully increase in value, but you will also regularly receive dividends from your art assets.
All the problematic overhead costs such as storage, insurance and maintenance are carried by the club. There is also no exit date, so, after a set period, works can be returned to the investor – or taken to market as and when they are mostly fruitfully sold.
Democratising both art enjoyment and art investment is a powerful incentive, and one that works both for the collector and the emerging artists who are looking to build on exciting careers.
Perhaps the shared economy has found a successful way to negotiate art investment for beginners.