We’ve taken a look at the outlook for art investment based on two recently published reports. Over the past couple of months, Mintus has conducted a global survey of wealthy individuals with investable assets of at least $1 million [1]. Concurrently, Knight Frank have compiled and released their Wealth Report 2023.
Key findings were that as many as 42% of experienced investors have art in their portfolio, with a further 14% seriously considering it as an investment, despite the reputation of art investment as a specialist pursuit. Given the performance of art as an asset class, which according to Knight Frank was the best performing passion investment in 2022, this should not come as a particular surprise. That said, there is still room for growth: of the individuals with net worths of over $30 million surveyed by Knight Frank, 59% said they were looking to invest in art in 2023.
Increasing exposure in 2023
Over the course of 2022, Knight Frank’s Luxury Investment Index saw growth of 16%. The Index tracks the value of 10 investments of passion [2], including art, cars, jewellery, watches, and wine. Art was the highest performing of all the assets, rising from third place in the previous year, having seen a year-on-year increase of 29% in 2022.
Mintus found that the performance of art over the past year has seen investors look to maintain exposure in 2023. Looking ahead to the next 12 months’ investment plans, on balance 17% of wealthy investors are looking to maintain their exposure to art, ahead of cryptocurrency at 14% and Private Equity & Venture Capital at 12%. Comparatively, only 7% investors expect to increase their portfolio exposure to wine and spirits in 2023, showcasing art investment as an asset class to watch this year.
Art in a Diversified Investment Portfolio
Mintus’ survey found that the average number of asset classes held by investors currently is six, which typically includes, on average, three alternative assets. In value terms there is also a 50:50 split between traditional and alternative asset classes. More revealingly, this split highlights the upward trend in portfolio diversification across a range of alternative asset classes in response to recent market turmoil and the underperformance of the classic 60/40 portfolio. This trend is enabled by access to new assets via growing online platforms, paving the way for fractional art investment to continue its upward growth.
Of those surveyed who had art as part of their investment portfolio, on average it accounted for 6% of their total portfolio value.
Attitudes across Geographies
Aside from investor habits, there are also geographical differences that play a role in attitude towards art investment, with 62% of experienced investors in the US and 40% in the UK claiming art in their portfolio, and only 4% of investors in emerging markets such as the UAE saying to the same. Yet considering this, adoption in countries such as the UAE is far more open to fractional art investment, with 83% of art investors having invested in fractional art as opposed to the US, which saw only 17%. As the US already has established art industries in contrast to the UAE, fractional art investment is likely to see greater adoption in emerging markets.
Comments on the Findings
Tamer Ozmen, Mintus CEO: “The wealthy investors surveyed by Mintus are leading the way with significant diversification across traditional and alternative asset classes in light of the challenging market conditions we’ve seen in recent years. They have shown a significant appetite for art investment, and have told us that they expect that to continue – no doubt a reflection of art’s historically strong performance during challenging economic times.”
“Art is a unique investment, yet it is still a smart investment at heart so you don’t need to be an art aficionado to invest and benefit. It should be treated like any other asset class – the fact that we are seeing art craft a place for itself as a go-to portfolio diversifier is a step in the right direction, and we look forward to growing the fractional art investment market by offering attractive opportunities to investors.”
Footnotes:
[1] Findings are based on an independent survey conducted in January 2023 with a specialist sample size of 125 High-Net-Worth individuals with a portfolio of at least $1m in assets, respondents came from the UK (50), US (50) and UAE (25).
[2] The ten investments of passion are: art, cars, coins, coloured diamonds, furniture, handbags, jewellery, rare whisky bottles, watches, wine.
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