Art beyond passion to an asset
Author: Vaibhav Taranekar
Art is not just limited to an expression of emotions or abstract feelings of the maker, it also stimulates a gamut of reaction from awe, mesmerizing to absolute intimidation. It really depends on the vantage point of the person looking at art, stage of life and maturity of exposure to art.
Till a couple of decades back, art collection was more of a hobby than seen as investing in art. Recently these two paths have converged where hobby is also a way to diversify one's portfolio, making art a long term investment asset.
Solutions which are financial and advisory are tailored to investing in paintings, drawings, prints, and sculpture. Art research advisors help family offices, HNIs as well as private art collectors in finding the art and help in procuring the art for them. Capital value of art, more in the form of preservation of wealth, has been a key driving factor for increased interest in art buying.
Serious investors balance their portfolio with hedge against fluctuations of their investment in stocks and bonds, with art portfolio. Investors view artwork less as a decorative object, and more as a tangible asset to hold and accrue value. If there are down sales, these tangible assets are further viewed as stores of wealth to ride out the turbulent market.
While the above is from financial perspective, there needs to be a passion and emotional value for the process of collecting art, and it is advisable for investors to research on art, trends, and build a connection with specific artforms.
Art world has certain level of opaqueness in the world of art, challenges on price manipulation, conflicts of interest, lack of transparency; and attempts are being made to generate strong awareness and address these in a rationale manner.
I believe diversifying your portfolio with art is a great way to mitigate risk while investing in an industry that has performed historically well across market sectors.