Art, for leisure or profit: an analysis of the movement of investment from equities into the 'Fine Art' market.

Abstract

The trade and investment into 'Fine Art' dates back centuries. While investment into art is unique in that it captures emotional, social, political, traditional and cultural values, the modern investor would include portfolio structures that are a combination of bonds and equities and in some cases these portfolios would diversify into alternative investments which include 'Fine Art' as a mechanism that not only secures some form of future profitability or a store of value, but also include a cultural element that holds meaning for the investor. Art sales are increasing by volume of trade, and countries like South Africa are catering towards the art tourist, showing increasing levels of exports of art products. This paper examines the decision making of the art tourist and the related flow of investments from equities into the art market. While 'Fine Art' as an investment mechanism may not hold the same degree of mobility or liquidity as other asset classes, it still holds a store of value over a long period of time. The choice to hold art within an asset portfolio would be similar to someone who chooses to invest in commodities, yet the additional factor of owning something that appeals more to the cultural and emotive schema is a strong motive for including 'Fine Art' into their portfolio.

Keywords

• Art Investment
• Equities
• Portfolio Diversification
• Uncertainty
• Hedging Art