The Street.com does a once over on the art market as an asset class and finds this interesting anecdote from Phillip Hoffman of the Fine Art Fund:
“We are managing quite a substantial amount of money, [$200 million in one example], but if you are talking about an oil trade, that is probably one trade for Goldman Sachs in one minute,” he said. “We are on a different scale from the rest of the financial world. Given that we are one of the largest players in the market, $100 million to $300 million, is neither here nor there.”
The art market itself may also be too small to accommodate large institutional investors. Hoffman recalled a discussion with the California Public Employees’ Retirement System, one of the largest pension funds in the U.S.
Representatives said they were intrigued by the diversification an art investment would provide. Their plan was to consider upward of $2 billion as an investment in the space. The problem, as Hoffman pointed out, is that there is an investable market at any given time of only about $10 billion.
“CalPERS with $2 billion would skew the market very rapidly,” he said. “But they said that any less than that wouldn’t move the needle on their diversification and correlation data.”
High-End Art Poses Possibility for Investors (The Street.com)