New Contemporary Art Fund

Katya Kazakina writing for Bloomberg has an article on another start up art fund. This fund is devoted to contemporary art and is called Anthea Art Investments AG located in Zug, Switzerland. The fund was scheduled to open in 2008 but was rescheduled and will now start seeking investors for May, 2010 and looks to raise $110 million, with a minimum investment of 250,000 Euros, or about $340,000.00. The fund will be diversified contemporary art, including 25% in iconic works, 45% in blue chip contemporary artists, 10% in emerging regions such as China and India, 2% in emerging artists and 18% in arbitrage art or the buying and selling for profit as opposed to a holding strategy.

I have posted on art investment funds in the past, and should note many have struggled or have closed, although as well all know the art market has been difficult to navigate over the past year or two.

The article states

Anthea I will be overseen by the Irish Financial Services Regulatory Authority. By contrast, most art funds aren’t regulated, and that has put off investors.

“One of the issues of these funds is transparency,” said Pierre Valentin, London-based partner at Withers LLP, who specializes in art law and litigation. Valentin went on to say, “Art fund as a concept is in its infancy. It’s also a risky investment. And it hasn’t been a very good time for funds to persuade investors to put their money in a form of investment that is perceived to be risky. The track record is not there. You don’t know how successful they are going to be.”

Uneven Results

Subba, who was raised in Italy and now lives in Zurich, said his experience in structured investments should help Anthea I avoid the often sharply uneven results of art funds.

London-based Fine Art Fund Group, which has been run by Philip Hoffman since its start in 2001 and is one of the best- known in this area, comprises four unregulated funds: The Fine Art Fund and Fine Art Fund II, both invested in works from Old Masters to contemporary art; the Chinese Fine Art Fund; and the Middle Eastern Fine Art Fund.

Hoffman said the average compound annual return for artworks sold since 2004 is 33 percent. Hedge funds lost 19 percent in 2008 and were up 20 percent in 2009, according to Chicago-based Hedge Fund Research Inc.

Hoffman said the unsold artworks of the two Fine Art funds declined 30 percent in value from the market’s peak at the end of 2007 through mid-2009, yet were up an average of 30 percent from the purchase prices. He said that while his funds are unregulated, they are subject to third-party audits and third- party valuations.

To read the full Bloomberg article, click HERE.