Investing in Fine Art: A Hedge Against Inflation

No matter how much you have saved, knowing how to invest is crucial. Whether you have just over 9,000 in savings or a substantial sum, it’s important to ensure your investments are in line with your financial goals and market conditions.

At its current levels, inflation is eroding the value of your savings. In such a climate, many retail investors have chosen to close their brokerage accounts. However, at the institutional level, professionals are exploring alternative strategies. According to Goldman Sachs and BlackRock, the era of “there is no alternative” (No Alternative, NIA) is over. This shift opens the door to new investment opportunities.

Why Invest in Fine Art?

Goldman Sachs experts recommend investing in real assets, with a particular focus on fine art. One overlooked but valuable asset in this category is blue-chip art.

Asset Class Correlation

According to Citi, blue-chip art has one of the lowest correlations to equities of any major asset class. This means that if the market dips, blue-chip art is less likely to follow suit. This makes it a solid option for those seeking diversification and protection against market volatility.

Historical Performance

Contemporary art has shown impressive returns over the long term. Over the past 26 years, the price appreciation of contemporary art has outpaced the SP 500 by twofold. Despite this, it remains less well-known than traditional stock investments.

Market Trends

The Wall Street Journal has dubbed the contemporary art market as “one of the hottest markets on Earth” due to its unprecedented transaction volume. Art transactions are at an all-time high, indicating a robust and growing market.

Accessibility and Growth

The primary barrier to entry into the art market has traditionally been the cost. It requires significant capital to invest in famous artworks like those by Picasso, Banksy, and Basquiat. However, in 2012, regulatory changes brought about new opportunities. These changes made it more flexible for real assets, such as paintings, to be securitized and shares sold to everyday investors.

A pioneering company, Masterworks, has built the largest platform for securitized art investing. Through Masterworks, regular investors can now access high-profile artworks, even with modest investments. Investors can explore various famous artworks available for investment on their dedicated platform.

Conclusion

Given the current market conditions and the need to hedge against inflation, investing in fine art can be a strategic decision. The unique attributes of blue-chip art, combined with its historical performance and growing popularity, make it a compelling investment alternative. For investors looking to diversify their portfolios and protect their wealth, exploring the world of fine art could be a wise move.