Investing in contemporary art can often seem overwhelming and daunting. For many people, it seems a fickle and volatile world, driven by fads and an obsession with finding the next big thing.
Well, maybe so – but in that sense, perhaps that doesn’t make it much different to any other investment sector. Investors are always looking for value, and the art world is no different.
But where should a new investor start in the world of contemporary art? Here are just a few tips on how to get ahead in the world of art investment funds.
- Buy what you like, not what you think will make you money
This may sound like very poor advice for an investor looking to make money on the art they buy. But we’re firm believers in following your passion. The chances are – if you have a good eye – that if you love a piece then others will love it too one day.
Chasing after quick returns from the same assets that everyone else is buying is rarely a good strategy in investment. So trust your instincts and be a leader in the market, not a follower.
- Authentication is everything
In the art world, the financial difference between a genuine piece and a fake can run into the hundreds of millions. It’s why provenance and authenticity is so important.
So while your gut instincts are important, so is your ability to do thorough due diligence. Of course it may be that you will need to draw on external help to verify the authenticity of any work you’re considering buying. But there is also a lot you can do yourself.
Do your background research, but we also always suggest building up strong relationships with trusted advisers and experts who you can draw on when you need them.
- Understand how interconnected the art world is – and diversify accordingly
Of course, diversifying your portfolio is always a good idea, in any area of investment. But it is also the case in the world of contemporary art, where the value of different movements or artists can have a direct impact on other, related artists.
So, our advice is to spread your investment across a number of different movements and artists – and watch and learn carefully to see how the performance of one effects the others.
- Always buy the best quality example you can
Not every piece created by an artist is of the same quality, and this directly impacts on the value of the artwork you are thinking of investing in. Of course it takes time and experience to understand what that quality looks like, and it is a long learning process.
But identifying quality in a piece of art is also partly an emotional process. How do you feel when you look at it? If it moves you, and has an emotional impact on you, then there’s a good chance that others will share your opinion.
Look for the way the artist uses colour, how they use symmetry, and in some cases if the work actually feels finished. Of course, an unfinished Warhol is still a Warhol, but there is a qualitative difference that will impact the value of the investment.
Spotting quality is a tough skill. But it is one that is well worth putting time and effort into, because it is knowledge that could make a huge difference to the return you ultimately see.
Jürg Widmer Probst