About mutual funds artistic values

At that time, both stock and bond markets remain volatile, wealthy investors - mostly from the "emerging" markets such as Russia, India and China - are seeking to invest in physical assets, in particular, works of art. Interest in art investment and spurred last year's record in the top segment of the market: Picasso brought at public auction 106.5 million, a sculpture by Giacometti - 104.3 million, the Chinese Emperor Qianlong era vase - 89,5 million, and a rare four-volume illustrated Audubon - 11,5 million.

In this regard, an increasing number of collective investment funds in the art, through which a work may possess, to avoid paying high taxes and commissions, as required, if the job belongs entirely to the buyer. Some argue that the return on this investment can reach 20%.

principle of many of these funds is relatively simple: a few large investors give the manager money to buy paintings, and then others begin to acquire shares in the works (value of shares tied to the market price of work). The size of commissions paid is about 5%of the value of assets and 20%of the profits.

this market is not very large (total assets - about $ 300 million), but it is actively growing. In Paris, newly opened stock exchange under the name Art Exchange, trading in shares of works by artists such as Saul Levitt (Sol LeWitt). In China, forming portfolio companies such as Noah Wealth Management and Terry Art Fund. What to Russia, it became the second (after India) country is permitted to include art in mutual funds. The relevant law was passed last summer. The Management Company "Leader", according to the press controlled by brothers Kovalchuk, established two mutual fund artistic values.

Predecessors of these funds were, but their fate is not always successful. During the boom of 2005-2007, nearly forty art funds bailed out 350 to $ 450 million, but after the financial crisis, most of them disappeared - leaving only the most reputable, like China Fund (China) and The Fine Art Fund (UK).

According to the American lawyer with the Securities Cristina del Rivero (Cristina del Rivero), the main problems associated with the securitization of art objects are opaque art market and the complexity of assessing the works.

Some experts fear that the art assets will attract a variety of dubious individuals who need to launder money and hide assets. One investor, who is familiar with the realities of the Russian market, argues that such investments might be interested in a new class of "political oligarchs" who do not want to keep money in banks.

Even the most ardent supporters of the art funds recognize that the global reach in the near future is not expected. Founder ArtVest Partners Michael Plummer (Michael Plummer), who previously held senior positions in the Christie's and Sotheby's, doubts that the practice will spread enough in the United States, where the financial system is tightly regulated.

addition , there is a problem such as lack of interest in the art community. For example, the president of the Association of Art Dealers of America, founder of the modern art gallery Mitchell-Innes & Nash Lucy Mitchell-Innes (Lucy Mitchell-Innes), said that he would never allow a young artist to sell work to the investment fund. In this regard, some experts there are fears that investors seeking to buy things at reasonable prices, will not be satisfied with the works of the highest quality. Harry Smith (Harry Smith), head of the evaluation of art objects Gurr Jones, notes that dealers tend to keep good, but inexpensive work themselves, and raise prices when they received offers from the funds. According to him, "appealing for art-work funds are always expensive and cheaply you can buy only what to buy should not be».

But despite all these obstacles, the number of investors which may boast of shares in the painting by Picasso, continues to grow.

material was prepared by Julia Maksimova, AI

Sources: dealbook.nytimes.com , artinvestment.ru