It’s been quite a while since we’ve heard of any art funds launching. The idea has been a perennial, blooming and fading with regularity like the seasons. In concept, art funds would seem to make a great deal of sense. In execution, they’re very difficult to pull off because very smart players (with outside financial backing) already exist in the market. In fact, there are quite a few of them both visible and less-than-visible.
The news is interesting because of where we are in the cycle. Art values have risen a great deal over the last decade and a half. But those same values seem to have plateaued in the last three years. That might make the best case for it being an artist picker’s market. It might also suggest returns will be harder to achieve going forward.
The United Talent Agency and collector/trader Peter Brant are launching the UTA Brant Fine Art Fund, seeking to raise $250 million to speculate on “best-in-class” works by blue-chip postwar (i.e. 1945-70) and contemporary (i.e. 1970-present) artists, with an investment lock-up of seven years or more. UTA has operated an uneventful downtown LA art gallery for the past few seasons, recently relocating it to Beverly Hills, and Brant has played at the art market (spectacularly) for 40 years. […] Brant, who is unequivocally among the world’s most knowledgeable participants in the art market with an enviable, legendary personal hoard, is said to have achieved a 19.18 percent rate of return from his personal art investing from 1996 to 2016, which for some unknown reason grows to 27.41 percent for the same period by the last page of the offering. This is plain sloppy. It also states that Brant guaranteed a total of $100 million of art from 2013 to 2016, with a profit of $6.2 million on the bets.
The other interesting piece of information is that last sentence on guarantees. Who knows how that has been calculated. But remember that this is marketing material and UTA Brant wants you to think of 6.2% yield on guarantees as good money.