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Written by: Steven Sulley
18/02/2022
The past two years have been especially tumultuous for the world of investment, with nearly every market impacted by the effects of the pandemic. However, the art world has shown remarkable resilience.

The art market is not correlated with stocks or bonds and tends to remain stable regardless of how the financial markets are behaving. This makes art a powerful class of alternative asset, and something potential investors should seriously consider when looking to diversify their investments. Research from Deloitte backs this up, with 85% of wealth managers recommending the inclusion of fine art in a balanced investment portfolio.

While many people may think exclusively of paintings when they think of fine art, the reality is far more diverse, and encompasses a whole range of mediums including photography, sculpture, drawings, and limited edition prints.

Despite this, many people still find the art world intimidating, and are not sure where to begin when it comes to collecting and investing in fine art. If you have an interest in diversifying your portfolio by investing in art, here are five pointers to help you get started.

Look to the market

A huge part of investment in art is trying to anticipate coming trends within the market, so it makes sense to pay close attention to what is rising or falling in popularity, and who or what collectors, galleries and other artists are themselves showing interest in. Perhaps articles like the Motley Fool Stock Advisor review might help you make a better investment decision.

As the value of any work will inevitably hinge on the art market, it is important to do your homework before making a purchase. If you fail to conduct proper research into the piece you are considering buying, you risk overspending and therefore not maximising the potential profit of the investment.

It is important to immerse yourself in the art world through publications, events and online communities, as this will make it far easier to spot developing trends and judge where market interest currently lies.

Attending museums, galleries and art fairs will assist you in making connections within the art community and becoming educated about the kind of art you wish to invest in, as will other resources such as specialist books and magazines. The internet also provides many opportunities to learn and view art you may otherwise be unable to access, while making it easier to connect with others within the art world.

Taking note of who other popular artists are showing interest in can also be especially illuminating, giving you an indication of the areas and movements that may be worth your investment.

Cultural significance

Priorities in art have been steadily shifting over recent years. While there will of course always be interest in the works of the Old Masters, there is also a growing interest in works that address the issues of our time.

This is motivated in large part by younger collectors, who see the value in modern art as a way of connecting and engaging with contemporary culture, and redressing injustices based on race and gender.

This ongoing recalibration of society has had a marked effect on the art market. There is more interest in works which stimulate discussions of social impact, as well as those which increase the visibility of female artists and artists of colour.

Originals vs Limited Editions

While original works are some of the most highly valued pieces in terms of investing, those on a more modest budget should not disregard investment in limited-edition prints, as these can also be a viable investment option.

While they may not command the price tag of a large original work, limited edition prints are works of art in their own right and can be especially valuable when part of a larger collection.

Consider the quality

For those new to collecting and investing in art, especially on a limited budget, it is highly advisable to make the quality of the work one of your top priorities when picking a potential investment piece.

The condition of an artwork, even those by big names, will always be a significant factor when determining value, and it will inevitably command a lower price if damaged than in mint condition. It is therefore a good idea to consider the materials used in the piece, as works of art that utilise high quality materials are far more likely to maintain their condition.

When selecting a piece for investment, you should always consider how well it will age. With this in mind, it is beneficial to consult with an art specialist if you are ever unsure, as they will be best placed to advise you before you invest. It is also worth bearing in mind the maintenance and shipping or handling costs of works of fine art, as these will affect the potential profit to be made from a piece.

As with any valuable asset, art must be properly maintained. Being a long-term investment, it is crucial to preserve the value of the works you invest in and avoid any hazards that might compromise the longevity of the piece and result in depreciated value. Framing can often be as important as the art itself, as it not only protects the work, but can actually increase its value.

Art collectibles

The prices of artworks traditionally vary based on the materials and mediums they use, for example, a pencil or charcoal drawing is likely to come with a lower price tag than a bronze sculpture. This can be used to your advantage to buy an original piece at an affordable price point. Diversifying your interests into a range of mediums is a great way to begin your collection or investment portfolio.

For example, a stainless steel sculpture entitled “Rabbit” by artist Jeff Koons, sold for $91.1 million in May 2019, while a piece of performance art from Italian artist David Datuna, comprising of a banana duct taped to a wall, sold for $120,000.

While these pieces may be out of the price ranges (or inclinations) of some, art collectibles offer a way for many younger investors to get a foothold in the art investment scene. Many collectibles are an affordable way to access highly promising artists, while also possessing good investment potential.

Steven Sulley is founder and art advisor of Soho-based art studio Woodbury House

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