The need and desire for investing in art has grown due to the availability of art price data, which has enabled the consumer to make more informed and effective decisions. These market reports, databases & indices, have become essential analytical tools for art investors, who can use this data to assess financial performance. The main problem or disadvantage of these tools is that the information can be neither consistent nor complete, which can distort results when compared to indices for more transparent markets.There are always financial implications of including art as an alternative asset class. While this used to be a non-transparent market, it is becoming more accessible due to the increasing availability of indices and data on the art market. Investors are always looking for alternative assets and efficient solutions to minimise risk, while reaping high returns.
The search for greater returns through alternative asset classes has expanded and has been excelled by the relatively poor performance of traditional asset classes in past years. The need and desire to generate high risk adjusted returns from diversification into assets which offer minimal correlation with bonds & equities is very desirable.There has been rapid and large growth in traditional alternative investments such as real estate and hedge fund investments but additionally, there have been a number of funds specialising in art which have emerged recently which offer a beneficial diversification strategy with low correlation with traditional asset classes.Art funds also offer investors the ability and chance to invest indirectly into the art market. Indirect investment can lack the aesthetic pleasure from possessing the art but financial gain can be made by combining resources with the help of professionals. The art fund market is a young and growing market still in its infancy. It provides opportunities but there are few alternatives and these tend to be only available to investors willing to invest at a substantial level.
In time, these funds may become more accessible to the mainstream investor. Many studies have shown that art’s low correlation with other asset classes offer diversification benefits from holding art in an investment portfolio & provide support for investors to consider art an attractive addition to their investment strategy.So if you are an investor looking to make a significant financial gain, then the art market is a good choice to get involved. There are always risks involved in any investment but the art market is a growing market and can be very rewarding.