Why
Invest
in art
Art as a Timeless Asset. Art is not just a masterpiece for your walls; it’s a tangible asset with the potential for impressive returns. Discover how Crusoe Contemporary bridges culture and commerce to make art a cornerstone of your investment portfolio.
Art Can Outperform the S&P 500
One of the most common benchmarks for measuring the performance of investments is the S&P 500, an index that tracks the performance of 500 large companies listed on the US stock market. The S&P 500 is widely regarded as a proxy for the overall health of the US economy and the stock market.
However, art can sometimes outperform the S&P 500, especially in the long term. Between 1995 and 2022, the stock market index S&P 500 yielded an average annual return of 9%, while contemporary art delivered an average annual return of 12.6% over the same period.
This means that art can offer higher returns than the stock market, as well as lower volatility and risk. Of course, this does not mean that art is always a better investment than stocks, or that every piece of art will appreciate in value. Art investing requires careful research, analysis, and selection, as well as patience and passion.
The Art Market is On The Up and Up
In 2022, the global art market achieved a substantial milestone by generating nearly $68 billion U.S. dollars. This surpassed pre-COVID figures, marking the second-highest value in the past 15 years. The US, UK, and China make up for about 80% of the total sales value.
In 2023, art took the lead in the Knight Frank Luxury Investment Index (KFLII), even as the growth of other “investments of passion” (watches, coins, cars, wine, etc.) slowed or dropped.
Inflation Protection
Inflation is the general increase in the prices of goods and services over time, which reduces the purchasing power of money. Inflation can erode the value of your investments, especially if they are denominated in fiat currency, such as the US dollar.
Art, on the other hand, can serve as a robust hedge against inflation and recession. This is because the value of art may not be inherently tied to the global economy, but rather to the subjective preferences and tastes of collectors and investors. Art can also retain its physical and aesthetic qualities over time, unlike some other assets that may deteriorate or become obsolete.
In the latter part of 2022, the art market rebounded and surpassed levels seen before the pandemic. This underscores that the value of art may not be affected by the economic downturn caused by the COVID-19 crisis.
Excellent Diversification Opportunity
Art is a good candidate for diversification because it has a low correlation with other asset classes, meaning that its value does not move in sync with the stock market, the economy, or other factors that affect most investments.
According to a report by Masterworks, the relationship between contemporary art and fixed-income investments showed a minimal correlation of 0.15 from 1985 to 2021. In the same timeframe, the correlation between contemporary art and developed market equities was even lower, at -0.04, indicating a nearly inverse relationship. Art can also provide a hedge against inflation, as its value tends to increase over time regardless of the changes in the purchasing power of money.
Art Investment
Statistics
Blue-chip art has seen consistent growth, with Post-War & Contemporary Art appreciating by 12.6% annually.
The global art market reached $65 billion last year, driven by high demand for limited-edition and blue-chip works.
Price rise of art increased during 10-year period by the Knight Frank Luxury Investment Index
Art vs S&P 500
This chart from a 2022 Citi Art Market report shows that Contemporary Art had a very low or even slightly negative historical correlation with stocks (Developed Equities, -0.04) and bonds (Investment Grade Fixed Income, 0.15).
Start today! Submit a request for a call and let our experts guide you in building a personalised portfolio with timeless value and growth potential.
Start
your journey
investing in
Art
