Asset Allocation Asset allocation is a strategic investment approach aimed at achieving an optimal balance between risk and reward. It involves adjusting the proportion of various assets within an investment portfolio in accordance with an investor’s risk tolerance, financial goals, and investment time horizon. The art market, characterized by its low correlation with financial markets, offers distinct advantages as an asset class. Artworks, especially those of high aesthetic and historical value, tend to maintain their worth even during periods of economic downturn and global recession. This resilience, combined with the low volatility associated with art as an investment, makes it a stable and long-term option for diversifying an investment portfolio. By including art in a well-balanced portfolio, investors can potentially reduce overall risk and enhance the portfolio’s long-term performance.
Art Fund An art fund is a privately-offered investment vehicle that focuses on generating returns through the acquisition and sale of artworks within specific fine-art domains. These funds are designed to balance long-term and short-term investment strategies. To mitigate risks in the highly volatile art market, art funds typically impose a lock-up period of at least three years. This period restricts investors from withdrawing their funds prematurely, allowing the fund managers to implement a more stable investment approach and potentially achieve higher returns. Managed by seasoned art investment professionals and overseen by a custodial team, as well as legal and audit departments, art funds ensure the proper handling of investments. In an art fund, investors share in the ownership of the acquired artworks, although they do not hold direct ownership of the fund itself. As of the close of 2024, eight art funds have been successfully launched, each with a distinct focus on different art-related themes. These funds are domiciled in various locations, such as the British Virgin Islands (BVI), Hong Kong (China), Liechtenstein, and Singapore, where one is structured as a sub-fund within a Variable Capital Company (VCC). Each of these art funds is meticulously designed to accommodate the diverse investment requirements and preferences of investors with an interest in the art market. The different domiciles and structures of these funds offer a range of options, allowing investors to choose the one that best aligns with their financial goals, risk tolerance, and investment strategies. This diversity in fund offerings not only caters to the unique needs of individual investors but also reflects the dynamic and multifaceted nature of the art investment landscape.
Fixed Asset Management Fixed Asset Management differs from the shared-ownership model of art funds. It creates a customized investment portfolio for each client, tailored to their specific investment preferences. The primary objective of Fixed Asset Management is to pursue absolute returns rather than merely hedging against risks. This approach allows investors to potentially achieve significant growth in their art-related investments. To safeguard the interests of investors, they have the option to appoint an attorney to oversee transactions, ensuring that all authorizations are properly obtained from both parties involved. Through professional evaluation and the development of personalized investment programs, Fixed Asset Management can effectively reduce investment risks. By carefully selecting artworks and timing investment decisions, the risk associated with art investment can be minimized, providing clients with a more secure and potentially rewarding investment experience.
Art Index Savoir Art Management collaborates with banks to offer exclusive art-related consulting and personalized investment planning services to its VIP clients. Leveraging its extensive network, deep-seated experience, and specialized expertise in the art market, Savoir Art Management undertakes research projects on the Art Index in partnership with investment banks. This research focuses on specific artists and analyzes data across different style periods, subjects, media, levels of representativeness, quantity, and size. The resulting detailed art index serves as an objective mathematical metric and a valuable reference tool for high -net-worth individuals interested in the art market. It provides insights into market trends, helping investors make more informed decisions about art-related investments.
Art as Collateral Artwork, as an investment, possesses unique characteristics. Over time, it has the potential to generate substantial returns and also contributes to the balance of an investor’s long-term portfolio. However, with the growing recognition of art as an asset class, its relatively low liquidity has become a concern, as it can be challenging to find a buyer quickly. Art-as-collateral arrangements address this issue. They enable investors to retain ownership of their art collections while using these assets as collateral to finance new art acquisitions, fund other investments, manage short-term cash requirements, or implement a long-term asset-allocation strategy. This flexibility allows investors to leverage the value of their art collections without sacrificing ownership, thereby maximizing the potential of their art – related investments.
