The New York Times ran special section on the art market over the holiday weekend in its International Herald Tribune outlet. One story cobbles together a few previously reported instances of art funds and rolls them into a trend piece. Phillip Hoffman’s Fine Art Fund gets the most space:
“We have averaged 30 percent annualized returns,” Mr. Hoffman said. “We have averaged the same returns in old masters, Impressionist and modern and contemporary. The biggest growth and the biggest drop have been in the contemporary sector. The most stable has been the old masters market.
“Between January and March, people did nothing because of the banking collapse. Now, some clients are looking to invest again,” Mr. Hoffman added. “This year, we plan to increase our size from $100 million to $130 million and add a distressed art fund.”
While distressed sellers are avoiding the publicity of the auction rooms, bargains can be struck in private deals. […] “Growth is going to be tough, and funds with no track record will find it very difficult to raise money in the current economic climate,” Mr. Hoffman said.
On the other hand, the paper runs a companion story by Souren Melikian that pours doubt onto the very idea of an art fund:
If “investment” means spending cash in the hope of making a profit on the basis of careful calculation, using objective data and dependable measuring instruments, then investment is the wrong word. There are no identical units in art, because no two works are ever absolutely similar, making exact calculation impossible. […] Going to an adviser is hardly a solution. If employed by an auction house, he or she has a vested interest in overstating the merits of what the company will be auctioning in a few weeks. Resisting that temptation requires admirable selflessness. And if the adviser is independent, it is prudent to ask yourself whether he or she is a saint whose sole ambition in life is to help you make millions while the adviser gets a miserable commission.
Art Funds Feel a Revival as Economy Thaws Out (New York Times)
The Treacherous Lure of the Art Market (New York Times)