Art Trading Fund to Close

The Financial Times Adviser is reporting that art hedge fund, Art Trading Fund owned by Artistic Investment Advisers (AIA) will liquidate and close this month.  I reported on the AW Blog about the fund and a delay in launhing a new fund, click HERE to read that post. The fund, started in 2007 and was originally marketed as arts first hedge fund.  The plan for the Art Trading Fund was to invest in middle market art typically valued below 1 million GBP.  It is reported ATF has over 10 million GPB  under its investment control.  As we know, the middle market in art has not been strong, and in most market segments has seen substantial declines.

Fine Art Wealth Management, a consultancy, estimates that the number of global art funds has collapsed by 40% since the Lehman Brothers bankruptcy.

"Pre Lehman we estimated there were over 50 art funds globally at various stages of development. It is unknown exactly how many art funds exist globally today. However we believe the number is probably closer to 20," Randall James Willette, managing director, said.

The Art Trading Fund aimed to buy artwork in the lower to middle market range, paying up to £1m, while shorting 10 to 15 different economic indicators and securities that the directors believed exhibited a 96% correlation with the art market.

When the fund was launched in 2007, AIA was is the investment adviser to Art Investment PCC, a Guernsey regulated investment company. Minimum investment in the fund was £100,000 and was aimed at high net worth investors. At the time, it was said to be the first and only art hedge fund to "aggregate the primary and secondary art markets." It intended to provide a liquid high return investment over a three year closed end period with a targeted annualised return of 30%. Despite our enquiries, we were unable to establish what growth had actually been achieved, if any.

 To read the full FT Adviser column, click HERE.