Australian Art Investment Fund – artmarketblog.com
The growing popularity of art as an investment has resulted in the creation of a number of new art investment funds one of which is The Art Trust (http://www.thearttrust.com.au), an Australian based art investment fund. For those of you new to the concept, an art investment fund gives people the opportunity to invest a certain amount of money (by purchasing units), along with a group of other investors, in a professionally managed portfolio of art. I recently interviewed the Director of The Art Trust, David Baker, to get his views on art investment and more info on The Art Trust.
David refers to the Product Disclosure Statement (PDS) of The Art Trust several times in the interview which can be viewed here:
Interview with David Baker, Director of The Art Trust:
Q. What does The Art Trust offer prospective investors?
A. -An investment in The Art Trust is an in the “Alternative Asset” category, enabling diversification within an investment portfolio in the current volatile property and share markets.
-Expected strong long term capital gain.
Q. What is the structure of the fund?
A. A Managed Investment Scheme with independent Responsible Entity (See page 10 of PDS)
Q. Why should people invest in an art fund such as The Art Trust as opposed to purchasing an artwork outright?
A. – Risk minimised with diversified portfolio of works.
- The strong Art Investment Committee (AIC) members are independent of the commercial art world.
- With the curatorial staff, the AIC will help TAT to target “quality “works of an artist. (As we know, some of our best known artists have gone through periods of producing lesser quality works [especially as they got older]).
- The ability to buy works from the Trust with no commissions payable
- The ability to rent from the Trust (subject to strict conditions)
- Regular showings of Trust works, and talks from artists and AIC members
Q. In your opinion, what are the strengths of the Australian art market from an investment point of view?
A. -Underlying broad current (and continually increasing bradening) investment base.
-Historically provides an alternative to equities and property.
See page 14 of PDS for more information
Q. Who will decide what artworks the trust will invest in and what expertise do they have in this area?
A. There exists a stringent acquisition process (including provenance confirmation). Suitable works will be actively sought, or reactively assessed, by the curatorial staff. Final approval for purchase will be the responsibility of the Manager and RE based on the written advice of the AIC.
See details of AIC on Page 13 of the PDS
Q. What does the trust perceive as the benefits of focusing on Australian art?
A. -The TAT was created specifically for investing in Australian art, and the depth of knowledge within the curatorial staff and AIC are Australian focussed.
-Investing in foreign works creates a whole new range of risks, not least of which are the depth of knowledge required to assess whether the work is “quality”, and potential exchange risk problems.
Q. How does The Art Trust plan on generating a return for investors?
A. In simple statements income is derived from:
- Buying well and achieving capital gain on the acquisition over the life of the fund.
- Building on the existing rental business (and thereby income) which has about 450 works rented out at 15-20% pa of their market value
Q. What are the objectives of The Art Trust?
A. The objectives are predominantly based on the plan above, but See page 5 of the PDS for a more formal statement.
Q. What is the minimum investment amount?
A. $25,000. See page 5 of the PDS for more information (including the instalments)
Q. What is your background?
A. See pages 12 and 13 for details of directors and AIC members. Also attached details of our Chairman.
**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of http://www.artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications