Should Art Be Considered an Asset Class?

November 26, 2012

By Vanessa Drucker, Fundweb

Art makes for iffy returns, despite whatever the alternative investment crowd proclaims. The major November auctions in New York delivered “bipolar” results, according to the Mei Moses advisors, with only one standout success: the post war and contemporary evening sales produced compound annual returns of 15.3 per cent, versus 6.9 per cent in the S&P for the same holding period. Yet returns for all lots, including impressionists, at Sotheby’s and Christie’s over ten days, provided a paltry 6 percent, compared to 6.7 percent in the S&P.

Notwithstanding, art is a financial tool, according to an expert panel moderated by behavioral economist David Adler at New York’s Museum of American Finance. Adler kicked off the discussion with reference to the British Rail Pension Fund’s experience in art investments in the 1980s in an inflationary environment. Only a few items, such as Monet’s Santa Maria della Salute, actually outperformed equity markets during those years...

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