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Art as an Alternative Asset Class
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Art as an Alternative Asset Class

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Art today, is defined by its relationship to wealth as never before.  Prices of Artworks have been driven to unprecedented heights, as conventional boundaries within the Art world have rapidly collapsed.  A recent example, being the record sale held by Sotheby’s, for Artworks produced by Englishman, Damien Hirst, which attained a record $200 million on the very eve of the bankruptcy of Lehman Brothers.

Art is now being packaged, branded and sold at record prices.  The globalisation of the Art world on the back of widespread cultural appreciation is one reason for this shift.  Also to blame, is the changing face of business and the vast technological advances, which have taken transparency of and access to the Art world, to the next level.

Furthermore, the worlds of Art and Finance have never been more intertwined, as they are now.  Artwork, is seen not only as an object of pleasure, but it is also being used as a general “flight to material assets” strategy especially, in times of low interest rates or financial downturn.  Like Gold, Art can act as an important store of value, and is fast becoming the new and Precious Alternative Asset class, used by financiers to formulate attractive business opportunities.  A diversified Asset portfolio is paramount for capital protection and the growth of wealth over the long-term.  It also acts as a hedge in order to ride out any future bear markets with relative security.  Rare and unique Artworks offer a superb diversification strategy.

Art funds: as an Asset class are relatively new, and hold total assets of roughly $2 billion worldwide, according to the Art Fund Association. That is still tiny compared to the $2.7 trillion hedge fund industry. Nonetheless, related businesses are already springing up to support investing in Art, such as Luxembourg’s Freeport due to open its doors in September 2014, which will offer a highly secure, tax-beneficial place to stash Art.  Future demand for Art-Funds is expected to come from Asia, and especially China.  In 2012 alone, Chinese demand boosted the global Art-Fund market by a rocking 69% (Deloitte).  Art investing is particularly attractive to the Chinese, as demand is consistently rising while stocks are largely flat.

Art-Secured Lending: is a niche-credit service targeted towards UHNW Individuals, who wish to transform a Precious Art acquisition into a “Working Asset”.  Art is continuously becoming a more measureable asset class which can be monitored more securely by financial institutions as an underlying Asset-to-a-Loan.  Art-Secured Lending therefore, allows clients to maintain liquidity within their wealth portfolios, whilst investing in Precious Artworks.  We work with third parties in order to offer a variety of solutions specifically designed towards the clients’ needs.  For further information on Investing-in-Art, please contact us using,  email: contact@ibrahim-schneidawind.com.

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  1. admin says:

    Passion investments are certainly on the rise!