The Booming Contemporary Art Market

Between record-breaking auction results and the ever-expanding group of high net worth individuals, there are more collectors than ever looking to invest in the contemporary art market. Bloomberg recently reported that the boom of contemporary art, and works by significant artists like Christopher Wool, have “made single works more expensive than the market values of more than 800 members of the Nasdaq Composite Index.”

Christopher Wool, “Apocalypse Now”, 1988

In the past, the flurry of auction bidding has been centered around rare works by Dutch Masters or famous Impressionist painters. Recently, “contemporary art sales at auction shot up 33 percent last year and 1,078 percent over the past decade, according to France-based [and] those figures don’t include private sales and gallery transactions, which dwarf auction sales.” At these booming prices, major collectors are viewing artwork less as a decorative object, and more as a tangible, alternative asset to hold and accrue value while diversifying investment portfolios. Many of today’s top collectors can attribute large chucks of their wealth to art. Music mogul David Geffen’s $6.6 billion fortune consists of $2.3 billion in artwork, while LA philanthropists Eli & Edythe Broad have a collection valued at $2.2 billion, accounting for over 30% of their $7 billion fortune.

Diversifying your portfolio is the perfect way to invest in an industry that has performed historically well across market sectors. According to a recent survey by Deloitte, 78% of wealth managers believe that art should be part of a wealth management offering, up from 55% in 2014. In addition, 64% of art collectors in 2016 said investment value and returns were important motivations to invest in art, up from 47% of art collectors in 2014. For investors who seek the benefits of the financial qualities of art but do not have the expertise to invest, art funds like Arthena allow investors to reap the benefits of art as an alternative asset within their portfolio while having access to art and finance professionals who strategically invest in works that reflect positive trends in the market.

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