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Art is not correlated to any stock index or market
Artwork is a unique asset class that has a lot to offer investors. Not only is it a tangible asset, but it also has aesthetic appeal and is not subject to depreciation. In contrast to traditional assets such as stocks and bonds, artwork does not tend to be correlated to any stock index or market, which means that you can diversify your portfolio and avoid market risks. In addition, works of art held in museums are both speculative and public goods, meaning that future appreciation in their value will depend on demand.

Although art is not directly correlated to any stock index or market, it does have an important weight in a portfolio. For example, the Art 100 Index, which represents a broad portfolio of artwork, has a higher weight than individual works. The index is made up of works by a diverse group of artists.

It is a long-term investment
When deciding which art works to buy, it’s important to remember that art as an investment is a long term one. You can’t expect to see high returns in a short period of time, but if you have the patience to hold on to a single piece of art for 10 years, you can potentially see a healthy return.

There are several ways to invest in art, including purchasing original works and investing in reproductions. Reproductions are copies of original works and are the most affordable option, but they don’t have much investment value. If you’re new to investing in art, you may want to hire an art advisor to help you. An art advisor will be able to help you identify pieces, as well as determine what price to pay for them.

It can have negative carry due to storage and insurance
Art as an investment is a great diversification strategy for an investor, but it can also be risky because of negative carry due to storage and insurance. In addition, it has opaque market idiosyncrasies. For this reason, art investors must be savvy and liquid. However, it has many positive attributes, and if done right, it can outperform the equity market and equity index benchmarks.

It requires specialized knowledge
Investing in art can be a rewarding experience for both experienced and novice investors. However, the process of purchasing and storing fine art requires specialized knowledge. If you are new to the art market, it might be a good idea to seek expert advice before making a purchase. A specialist art advisor can help you make the best purchase decisions and can also help you with market research and art introductions.

The acquisition price of a work of art is often not publicly known and is usually known only to those involved. This makes it difficult to assess an artwork’s equilibrium price objectively. As such successful investment in art requires specialized knowledge of the art market and a scenario of economic and social developments in the future.

It can endure economic downturns
In a recent Wall Street Journal article, art was named the best investment class of 2018. This is no surprise, as the market outperformed most other markets in 2018. In 2018, blue chip artworks posted average gains of 10.6%, compared to a 4.5% decrease in the S&P 500. While this was a difficult year for markets, it is still interesting to see that art held its value during the recession. All the more reason to use art as an investment.

Despite its volatile nature, art remains an asset class that can withstand economic downturns. In fact, it can even be used as a hedge against inflation, which will help investors’ portfolios to weather economic downturns. This is especially important because the global economy is expected to grow at only 3.2% this year, which is lower than the 3.3% growth forecast at the end of last year. During economic downturns, risk-averse investors will often reduce their exposure to high-risk markets and shift their capital to more stable ones.

Just because you are using art as an investment it is no reason you shouldn’t display it in its best light. This is where the team at Phantom Lighting Systems can help. We will assist in developing the best custom lighting solution for your precious pieces. Reach out today!
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