Unconventional Investment- Dip into Art Collection

Written on Wednesday, September 16, 2015
By Vishwajeet Parashar- Senior VP & Group Head - Marketing, Bajaj Capital Ltd.

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For a traditional investor it might sound odd but trust me, art can be a good investment if it is carried out in a smart way. Returns may vary from time to time but if we consider the annual growth of last few years, it has seen a boom in global market. New investors find it easy to visit a gallery, swap their credit card but they don't realize that to enter the market there are other options too. That is why I said art investment needs to be carried in a smart way.

In this blog I will be sharing with you some of the alternative ways to start investing in art and how you can transform your existing collection into a valuable asset.

Invest in an art fund that is managed professionally

Art funds are not something new; they came into process a long back but have gained popularity in recent times. Its functioning is very similar to other investment funds, here investors with the help of advisers put their money and a team of professionals acquire investment (art) on his behalf. A professionally managed fund would try to get the art placed at premium galleries or museums to enhance the value of investment and they would sell it off for a profit. In duration of 7-9 years such investment would give a better return. You can consider this option as there is no entry barrier- you can enter with a minimum investment of single art and you don't have to worry about the security and maintenance of your investment.

Go for a private investment partnership

Private investment partnership is formed by group of individual art lovers. They pool their money and with the help of adviser they buy investment-grade art. Usually these groups are smaller and more casual than art funds. In private investment partnerships, as an investor you would have much more of a direct say in what the group decides to buys. However, look for a smart adviser and a group where members have a decent understanding of art, so that they know what investment to bet on. In case group members are fully dependent on the adviser, there is always risk of buying a piece that would incur loss.

Show some trust in emerging artists

If art collection is on your mind but you don't want to spend heavily then go for the works by emerging artists. You will get a competitive price as the artist would want to enter high end galleries. This is a more affordable way as the prices are on lower side and has a huge growth potential. However, there are risks associated with new faces as these artists are least known and as a result the investment might fail to capture eyeballs, whereas, even a minor work by a master artist is likely to generate solid returns over time.

Prefer developing markets

Don't ignore the developing markets such as China, Russia, India, Middle East and Brazil, being a new investor it can prove to be a good bet. Demand of art works from these reasons is rising day by day and as an investor it is an opportunity to cash on. Investing in these markets will not only result in huge pay offs but additionally it would also add a variety to your collection.

Search for off the radar works

Regional auctions are one event you cannot afford to miss. Track these auctions and pick collections from them, which you can sell off for a good profit. Be alert and discover collections from these interior locations as you never know you might get hold of a canvas goldmine.

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