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Diversify Your Portfolio with Art Investments

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Eduardo Sarian

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26 February 2019

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As current political and economic news reverberates around the world, uncertainty is breeding insecurity among investors. Equity markets are see-sawing while currencies and commodities are continually fighting for equilibrium.

Today, global economic powers seem to be facing off for a possible trade war that could result in a worldwide economic slowdown. There are increasing warning signs for investors, according to an October 10, BBC report

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Diversifying Your Investment Portfolio

No matter where you reside on the personal net worth scale, the mantra of diversifying your portfolio to protect against economic downdrafts is as appropriate as ever.

Financial advisors have long sermonized that fixed income positions tend to offset equity losses, although frequently they only soften the blow. Investing in hedge funds has become a favorite pastime for some high net worth individuals, although occasionally these funds have mirrored the look and sound of a punctured balloon. These operate with highly complex strategies designed to maximise gains while aiming to limit losses.

Real estate has been on a precipitous climb in some countries with perhaps an end in sight as interest rates ratchet upward. Real Estate Investment Trusts (REITS) have done well, but a correction will eventually occur.

 

Fine Art Investing Becomes More Accessible

We occasionally read and hear of massive returns for art pieces sold through the world’s top auction houses like Christie’s, Sotheby’s, and others. Some of those multimillion dollar works may have been purchased only a decade or so ago and subsequently generated gross profits well over 100%. While the investors reaped a substantial return, the auction houses also profited handsomely.

Investment-grade art offers an alternative and provides an opportunity for portfolio diversity. The art market collectively has beaten leading economic indices in recent decades and, in 2017, exceeded US$15 billion in transactions, according to ArtPrice.com. While there may be a correlation between art prices and the general state of the global economy, the tangibility, exclusivity, and eternal desirability of fine art will continue to support its value in the long-term.

However, until now, accessibility to the truly high-end artworks, the Picassos and Modiglianis, for example, has been limited to only the world’s very wealthiest individuals. Very few individuals or funds wish to, or are even capable of, competing against those collectors and galleries that have hundreds of millions to invest.

At Maecenas, with offices in London and Singapore, we offer an opportunity for accredited investors to participate in a democratic, safe, and easily accessible avenue by investing in art outside of the traditional channels.

Technology-driven art investing on Maecenas’ open platform allows new investors the opportunity to buy and sell shares of masterpieces in smaller, fractionalized increments. Investors can also diversify their art portfolio with investments in more than one piece. Maecenas art investing includes safe storage with insurance, real-time trading, and provenance certification.

Your investments are secured by the use of blockchain technology and highly transparent transactions through Smart Contracts.

 

How Does Blockchain Technology Work for Art Investing?

Today, we hear much about blockchain technology in the context of cryptocurrencies like Bitcoin, Ethereum, Ripple, and others. Although cryptocurrencies themselves are not yet mainstream investing and banking assets, the fundamental process and security of blockchain are viewed as a breakthrough foundation for many business applications of the future.

In simple terms, blockchain is a decentralized network of computers that jointly record and manage transactions. Because all relevant data is entirely decentralized, peer-to-peer transactions cannot be digitally altered or corrupted once they are recorded.

With the Maecenas art investment platform and its blockchain transaction history, the provenance of any art is assured. Artists, art lovers, and galleries can communicate while competing for shares in an electronic “auction house” framework.

In summary, the Maecenas system reduces the risk of provenance fraud, lowers transaction costs, and allows more investors and galleries to participate in the exciting and rewarding world of art.

 

Contact Maecenas

Investing in fine art with Maecenas is no longer complicated. The Maecenas platform eliminates expensive intermediaries in a curated, transparent market and provides a safer, less expensive avenue to invest in fine art. 

Topics: Alternative Investment, Art Investment

Eduardo Sarian

Written by Eduardo Sarian

After earning his MBA degree from The Wharton School of Business in 2009, Eduardo moved to London to work for UBS Investment Banking covering the European secondary market of private equity. After 4 years in Europe he took on the role of M&A Director at Corporacion America, a LatAm conglomerate focused on international infrastructure and energy. Based in Buenos Aires he executed a series of debt issuances for several airports the company had in the portfolio. In addition, he was involved in portfolio company restructurings having to deal in board negotiations in several instances. After moving to Singapore he began working in Maecenas as its CFO with the focus of streamlining the corporate structure as well as the art trading platform.

Please read the following disclaimer >

This blog post is illustrative and for informative and general education and discussion purposes only. It is not, and should not be regarded as “investment advice” or as a “recommendation” regarding a course of action, including without limitation as those terms are used in any applicable law or regulation. This information is provided with the understanding that with respect to the material provided herein (i) MAECENAS is not acting in a fiduciary or advisory capacity under any contract with you, or any applicable law or regulation, (ii) that you will make your own independent decision with respect to any course of action in connection herewith, as to whether such course of action is appropriate or proper based on your own judgment and your specific circumstances and objectives, (iii) that you are capable of understanding and assessing the merits of a course of action and evaluating investment risks independently.. MAECENAS does not purport to and does not, in any fashion, provide tax, accounting, actuarial, recordkeeping, legal, broker/dealer or any related services. You should consult your advisors with respect to these areas and any material with regards to investment decisions. You may not rely on the material contained herein. MAECENAS shall not have any liability for any damages of any kind whatsoever relating to this material. No part of this document may be reproduced in any manner, in whole or in part, without the written permission of MAECENAS except for your internal and/or personal use. This material is being provided to you at no cost and any fees paid by you to MAECENAS are solely general educational purposes. All of the foregoing statements apply regardless of (i) whether you now currently or may in the future become a user of MAECENAS’s platform or products and (ii) the terms contained in any applicable contract between you and MAECENAS.

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