By Dora Grossman-Weir
The Asset Class That’s Driven 20x Returns
No one likes hearing about an opportunity they missed, particularly when it comes to investments: whether it was that Bitcoin you sold back in 2011, the beachfront property that’s now worth billions, or an opportunity to get in early on Apple’s stock, everyone has their own regretful “what if” story.
But there’s one asset class that’s been quietly booming for decades: contemporary art. The contemporary art market has driven 21.3X returns since 1995, compared to the S&P 500’s 13.0X returns. To translate some of those numbers: if you had invested $15,000 in contemporary art in 1995, you’d have over $300,000 to your name today. Yet despite being one of the most solid and consistent investment opportunities year after year, the contemporary art market is still largely untapped.
While these stats may seem staggering, it’s still not too late to get your foot in the door: the market is growing and doesn’t show any signs of slowing down. According to a study done by Art Basel, looking ahead to 2024, over 83% of dealers expected either an uptick in sales or stable turnover, and only 16% predicted any decline.
Another strength of an art market investment: contemporary art prices have historically demonstrated low correlation with other asset classes during periods of financial stress. Having even 15%-30% of your portfolio relatively unwavering during turbulent financial times can create overall stability and mitigate anxiety.
The question then remains: when the contemporary art market has outpaced the S&P 500 by 64% since 1995, when art investment values have proven to be so resilient in times of financial stress, why aren’t more people choosing contemporary art as a way to diversify their portfolios?
While marketplaces and auction houses like Sotheby’s have existed for more than 275 years, the entry point into investments in art has largely been inaccessible: the price point of most high value pieces can be astronomical, and smart investments require high-level knowledge of the art world, not to mention how just getting a foot in the door of with the right dealer can feel daunting.
Recently, excited investors have been turning to a platform called Masterworks to diversify their portfolios. Masterworks provides an accessible ‘in’ to the world of contemporary art investments. They select the artists based on research from their team, purchase and securitize the artwork, and investors can buy marginal shares of pieces the platform is holding. When Masterworks sells a painting, investors reap the benefits: returns on recent sales from pieces by George Condo have clocked in returns between 21.5%-39.4%, and Cecily Brown’s two paintings had returns between 14.6%-19%.
Masterworks also mitigates the risks typical associated with art investment: while art acquisition comes with considerable extra costs, such as commissions and insurance, Masterworks handles all of that for you so all you have to worry about is your incremental stake in a piece. And the typical risks of forgery, theft, or damage are all secured against by their team. And while the art isn’t physically in your space, Masterworks still affords you a relationship with the pieces you’re invested in, providing you with information about each piece, as well as background on the artists.
Overall, whether you are in it for the love of the art, or for the consistent returns, Masterworks is a perfect entry place for individuals looking to start investing in contemporary art. The company has already sold 22 paintings today, with consistently positive returns as high as 77%. But it’s not too late to get on board – don’t let this be one of those regretful “what if” stories.
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by Dora Grossman-Weir