Fine Art Funds

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The Wall Street Journal recently ran an article about fine art funds.  I have posted numerous times about investing in fine art funds. Some of the posts were on new funds, while others were that others have had some difficulties.  Often times when the wealthy start looking for alternative as a store of value, they look toward the art and collectibles market.

The Wall Street Journal reports

One solution is a private-equity-style approach, with a management team collecting a 2% annual fee and another 20% of any profits. That is the strategy of London's The Fine Art Fund Group, started in 2004, and The Collectors Fund of Kansas City, Mo., launched in 2006. The firms, whose first funds are no longer open to new investors, have generated annualized returns of over 25% on artwork already bought and sold.

Of course, both funds are still holding the majority of the art they bought, and it is unclear how much the remaining works will fetch. But the firms have reasonable strategies in place to take advantage of any market inefficiencies.

The Collectors Fund invests in modern American art, with a price range from a couple-hundred-thousand dollars to a couple of million. That allows the fund to focus its expertise in a relatively small world to find good buys. And though not trophy pieces, such works are pricey enough to be rare. That likely means a decent chance of finding buyers when the fund considers selling.

Similarly, The Fine Art Fund has amassed a large team of experts to ensure comprehensive coverage of the segments where it is active. It tends to buy art in the private market, where there can be far less competition than at public auctions.

Click HERE to read the full WSJ article. Sometimes the WSJ has articles behind a pay to view firewall so the link may not work, I was able to get the full article by searching Google News for "Mastering the Fine Art of Finance".