Page 134 - OCEAN BLUE - WINTER 2016
P. 134
FINANCE
ART
INVESTMENT
WHAT ELSE?
W elcome to the “sub- The main characteristics usually used to they suggest the emergence of a financial fine
zero-rate” world with its define art markets can be summarized in the art market where fine art is considered as a
ZIRP, NIRP and QE. This following way: high-risk investment, illiquid, new asset class.
means that bond yields opaque, unregulated, high transaction costs, Some high net worth individuals view art as a
are now negative in Switzerland, Germany, at the mercy of erratic public taste and short- pure financial investment and with the growing
Finland, Netherlands, Austria, Belgium, lived trends. need to diversify portfolios, there should be
Denmark, France, Ireland, Sweden, Italy and Artworks do not generate any cash flows space for more investment products that offer
Spain. So, irrespective of the credit quality of that can be discounted, however, income can an indirect exposure to art and other collectible
those borrowers, bond investors in all of those be obtained through lending, with expenses assets. For now, some of these individuals are
countries are guaranteed to lose money if they incurred for storage, insurance and associated enjoying valuable art either exposed in their
hold that short-term paper until it matures. costs. The art markets are also currently living rooms or hidden in freeports.
Strangely, when asked about risks, these virtually ‘unhedgeable’.
investors tend to remain on the conservative This short description of the art markets might
side and continue to fear the volatility of the be enough to discourage many. However, if we
equity, currency and commodity markets. take a closer look at the latest trends which are
directly or indirectly affecting the art markets,
So wealthy individuals are asking their bankers:
Should «Art» be considered for my portfolio?
By: Daniel J. Penseyres
134 www.oceanblueMAGAZINE.com
