Colin Gleadell has an excellent, detailed look at the Tosca Fund financed by Mehmet Dalman and Zelda Cheatle that is being sold throughout this year. Gleadell’s story makes great reading for those who dismiss the idea of art investing outright. Though it is important to remember that few of these successful investments are art funds proper. They’re usually financiers partnering with dealers to make a relatively small investment far below what art funds would consider significant.

Gleadell’s story makes another interesting point. The successful art funds seem to be in the photography field:

[Giles] Huxley-Parlour says photography funds are not so unusual since the Tosca Fund was launched. The Art Photography Fund in Austria launched in 2008 and estimates that the value of its holdings has increased by 30 per cent. The Beetles gallery also runs a fund, promoting art both for enjoyment and investment.

So far, sales from the Tosca Fund are doing well, says Cheatle. About 10 per cent of the collection has been sold and 30 per cent of the investment returned. But the final tally will not be known until November, by which time everything, according to the terms of the fund, is due to have been sold.

We can add another example to Gleadell’s observation. In 1988, a woman named Jill Quasha was backed with $2 million to assemble a collection of photographs that captured the history of photography. In two years she bought 69 works. Twenty years later, the Quillan Collection was sold at Sotheby’s for $8.9m. One of the works had been held back for further study. And many of the works had high buyer’s commissions. So the Quillan Collection probably didn’t realized a full $8 million on the sale.

A four-fold increase in 20 years is a good return but not a spectacular one as far as investing returns go. One observer calculated it as 7.2% annualized but that probably includes the buyer’s premium.

When the time period of the investment is taken into account, 1988 to 2008 was a pretty good time to invest in the stock market with plenty of gains to be had anywhere along the way, the Quillan Collection ends up being far more interesting for its art historical accomplishment than its investment returns.

Art Sales: Fund with a Special Focus (Telegraph)