Art as an Alternative Asset

Art has been used to grow and diversify wealth for centuries but has remained a dormant asset class for most investors because of the high buy-in, fees and required expertise.

Alternative Investments: The Role of Art

Fractional art investment breaks down these barriers and gives investors access to an asset with prestigious history and huge potential.

To get a sense of this and the evolution of investors’ portfolios, Mintus conducted a survey of wealthy investors from the US, UK, and UAE. The results illustrate the diversity of modern portfolios and the important role of alternatives, like art.

What does a typical investment portfolio look like?

In today’s landscape, investors are looking beyond traditional asset classes and allocations. Against a backdrop of the conventional equity/bond portfolio suffering its worst year on record in 2022¹ and inflation reducing gains, the pre-existing surge into alternative assets has compounded.

Based on our survey, the average wealthy investor portfolio now contains upwards of 50% alternatives², and one of the fastest growing allocations is art. The typical investor had an average of 6.1 asset classes in their portfolios, including an average of 3.6 alternative assets. The wealthiest investors (with portfolios over $5mn) had the greatest exposure to alternative asset classes, with an average of 5 alternative asset classes accounting for 58% of portfolio value.

What is the role of art in a balanced portfolio?

42% of wealthy investors surveyed already invest in art, accounting for an average of 5.9% of portfolio value. The survey results also showed a correlation with wealth – 79.5% of the wealthiest investors have art in their portfolio, compared to 19.4% of those with $1m-$2m in assets.

Investors cited interest and a desire to diversify their portfolios as the main reason for investing in art, which is consistent with what our investors tell us:

“I have invested in art and jewellery, mainly watches, as part of my diversified portfolio for some time. These are personal passions of mine that keep things interesting, but the art market has shown great resilience during recent volatility, helping to add an element of protection against multiple attacks.”

– Mark Bedford, experienced investor and Mintus client

What about fractional art?

Those surveyed by Mintus that currently invest in fractional art cite the attractive returns and advice from their professional advisor as key factors in their decision. By lowering the barriers to entry significantly and offering curated investment options, fractional art is staking its claim within investors’ portfolios as a hedge against inflation with strong returns. That’s why although relatively new, the fractional art market is growing rapidly with annual investment boosting to +$150m in 2022³.

Undoubtedly, like the Medicis, these five examples of buying, collecting, and gifting art to be enjoyed by others is a potent demonstration of success and of taste; their art investments providing a constant dividend of cachet and, as auction performances show, significant financial return.

What is the outlook for art investment?

Wealthy investors identified art as the second most popular alternative investment to pursue in the next twelve months, ahead of Private Equity, Venture Capital Funds, and Wine & Spirits. This positive sentiment is strongest among 30–44-year-olds, also showing the sustainability of this asset class as the investor base matures.

This outlook is supported by ArtTactic’s most recent Global Art Market report, which found 84% of art market participants viewed the outlook for 2023 as equal or better than 2022. Within the blue-chip (+$1m artworks) bracket, the sentiment is even stronger with 92% having confidence in the market maintaining or improving on its current trajectory⁴.

Footnotes

CNBC, Why 60/40 portfolio is on track for its worst year ever
Mintus surveyed 125 UK, US and UAE investors with >$1m investible assets in January
ArtTactic, Fractional Ownership Monitor, December 2022
ArtTactic, Global Art Market Outlook 2023

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Frequently Asked Questions

We answer some of your common questions here.

The Artwork

Can I list my artwork for sale on Mintus?

We welcome any owner who wants to unlock liquidity from their collections to contact our Fine Art Team. This includes individual investors, galleries, institutions, and artists. Please reach out if you're interested in listing your artwork on the Mintus platform.

How is the art stored?

All artwork offered by Mintus is stored in climate-controlled, specialist art storage facilities, under a Mintus account. Current paintings are held in a facility in Delaware.

How is the artwork on Mintus selected?

Artwork is acquired through our unique relationships with the world’s most renowned collectors and galleries. Our Fine Art Team marries their own expertise with insights from fellow industry experts to identify one-of-a-kind investment opportunities from established artists with high-growth potential. Our team examines metrics such as the artist’s market track record, recent price velocity and momentum, and the size of their international collector base when making investment decisions.

General

How can I contact Mintus or make a complaint?

If you need support you can send an email to [email protected] or schedule a call using the links on each page of our website. If you need to make a complaint you can write to [email protected]. A description of our complaints policy is set out in the Investment Terms & Conditions for each investment.

Is Mintus authorised by the FCA?

Mintus Trading Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom under firm reference number 942522. For more details on our regulatory permissions please see the Financial Services Register.

What are the risks of investing?

For more information on risks, see the Memorandum for the relevant artwork and the important disclosures.

Does Mintus sell NFTs?

Mintus does not sell NFTs. NFTs are digital assets. Mintus enables qualifying investors to participate in the art market by purchasing interests in high value, physical artworks. Mintus’ platform facilitates investment in real, iconic artworks created by established artists.

General

Can I sell my shares?

Mintus is planning to in the future introduce a Secondary Market for investors in permitted locations, which will facilitate selling of shares to buyers, dependant on demand. Further details, including the timing relating to launching any such Secondary Market, will be notified to customers in due course.

Why do I need to be a ‘high net worth individual’, ‘sophisticated investor’, or 'qualified investor' to join the Mintus platform?

According to the regulations, certain investments can only be made available to investors who fall within these categories and Mintus must also follow appropriateness requirements when registering investors.

What does Mintus charge?

Fees are dependent on the specific artwork and the specific structure of the investment opportunity. Fees are clearly shown in advance for each artwork / investment opportunity, as displayed in the Memorandum that relates to the artwork / investment opportunity; this document is available to download from the profile of each artwork under the Opportunities section.

Is Mintus only for individual investors? Is it appropriate for wealth managers or private banks?

Both individual investors and institutions can invest in artworks. Individual investors will need to declare themselves to be ‘high net worth individuals’, ‘sophisticated investors’ or 'qualified investors' during the account creation process. Individual investors will also need to pass an appropriateness assessment. Professional investors including wealth managers, private banks and family offices should contact our team for more information on investing as an entity or managing multiple client accounts on the platform.

Is there a minimum investment on the platform?

For the opportunities listed, a minimum investment of $3,000 is required however investments can be for any amount above this and generally range from $15,000 to $100,000. International payments are accepted.

How do I transfer my funds to a USD account?

Funds can be sent from any denomination into our USD bank account. We will show you the estimated cost in your chosen currency during the investment process, however, this may change at the point of transfer and does not account for fees charged by your bank. When transferring, your bank may show an estimated conversion; alternatively, the funds can be sent in your local currency and converted at the point of receipt. Other transfer services such as Wise display exact fee and currency conversion rates to ensure you're sending the subscribed amount.

General

How will I be taxed once shares are sold or returns distributed?

Mintus does not provide tax advice. We recommend that investors obtain their own tax advice as every person has specific tax circumstances. Generally, income and profits generated from your investment can be subject to either income tax or capital gains tax (depending on the individual investor and the specific structure of the investment). Artworks are not income-generating during the period they’re held. If you are unsure about your tax or other legal requirements, please speak to a professional advisor.

Can I port my investment between Mintus’ artworks?

Not directly. In order to take an investment from one artwork to another, shares would need to be sold to a willing buyer on the future Mintus Secondary Market and then proceeds reinvested on the platform. The Secondary Market will only be available in permitted locations.

When can I expect to receive the valuation reports?

Typically, valuations occur at the end of June and December, with reports distributed to investors as soon as possible thereafter.

How are actions surrounding artworks communicated to investors?

All actions in relation to the asset are at the discretion of Mintus. Mintus will communicate with investors on a six-monthly basis with an update on the net asset value, and any further news will be communicated on an ad-hoc basis.

How soon are profits received by investors after the sale of the artwork?

Distributable profits will be made available to investors as soon as possible, once all sale-related administration is complete.

Am I able to reinvest profits from sales with Mintus?

Profits will be received into your Mintus wallet, with the option to withdraw the profits into a bank account or reinvest on the Mintus platform.

Mintus Trading Limited is authorised and regulated by the Financial Conduct Authority (FRN 942522).

Mintus.com is operated by Mintus Trading Limited, a company incorporated in England and Wales (Registration number 12643726).

Important Disclosures

Please familiarise yourself with the following disclosures before investing.

Performance Not Guaranteed

Past performance is no guarantee of future results. This is the case for specific pieces of art, for the artist’s market, for the art market as a whole, for Mintus, and for the funds managed by Mintus. Any historical returns, expected returns, or probability projections are not guaranteed and may not reflect actual future performance. Any investment involves a risk of loss, and prospective investors are urged to carefully consider whether an investment is suitable for them. The value of an investment may go down as well as up and investors may not get back their money originally invested. Investments in art, or in companies owning art, are highly illiquid and those investors who cannot hold an investment for the long term (at least 5 years) should not invest.

High Risk of Loss

All securities involve a high degree of risk and may result in partial or total loss of your investment. Your capital is at risk.

Specific Investment Risk

You should carefully read the Information Memorandum concerning the investment and the underlying asset held, and the associated risks specific to that asset and investment.

Performance Comparisons

The comparisons of historic performance of art, financial assets and commodities are comparisons of historical data which may not be a reliable indicator of the value of any given piece of work. In addition, different investments have differing features including differing risks, differing liquidity, and differing transparency of valuations. The comparisons included here do not reflect actual trading and are hypothetical returns generated based on proprietary methodologies developed by the third parties indicated on each picture. These performance calculations do not include any reduction for fees, which would likely decrease returns; investors in the investment opportunity described in this document will be charged fees based on their investment. Investors should treat the performance data provided in this document as illustrative only and should not base their investment decisions on them. Additional information on the figures provided here is available from Mintus on request.

Third Party Information

Some or all of the information provided, or linked, in this document was prepared or provided by one or more third parties. We have not independently verified any such statements or information, and such states or information may be inaccurate, incomplete or otherwise misleading. Additionally, statements and information contained in this document may include or be based on subjective judgments or assumptions, which may not turn out to be accurate.

Underlying Asset Risk

The underlying asset may be art, or another speculative asset class that may be illiquid, hard to value, and have a high risk of loss itself. Please note that art is not an investment instrument covered by the Financial Conduct Authority. The underlying asset may be valued in a currency other than the invested currency and therefore there may be currency exchange risk in addition to the inherent investment risk. Each asset in which you may invest will have risks that are specific to that asset class and indeed that asset itself. You should review all available material carefully before deciding to invest and, if you are unsure about whether the investment is a good decision for you, you should consult with an authorised investment advisor who has experience of the asset class in question.

Liquidity Not Guaranteed

Investments offered by Mintus are illiquid and there is never any guarantee that you will be able to exit your investments on the Secondary Market or at what price an exit (if any) will be achieved. In addition, the timeframes to liquidate the underlying asset and return capital may be extended beyond those anticipated by the manager due to many factors. You should not rely on any specific timeframes for a return of capital and should not enter into any investment if you think you may need to liquidate the investment in the medium to-long term.

Not a Public Exchange

The Mintus Secondary Market will not be a stock exchange or public securities exchange, there are no market makers, there is no guarantee of liquidity and no guarantee that once launched, the Mintus Secondary Market will continue to operate or remain available to investors. You may not be able to sell your investment easily or without taking a loss.

Forward-Looking Statements Should not be Relied Upon

This website contains certain forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "outlook," "seek," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, or state other forward-looking information. Future events, actions, plans or strategies are inherently uncertain and actual outcomes could differ materially from those set forth or anticipated in any forward-looking statements you receive. You are cautioned not to place undue reliance on any of these forward-looking statements.

Not a Recommendation, Speculative, and High Risk

Mintus does not make investment recommendations and no communication, through this website or in any other medium should be construed as a recommendation for any security offered on or off this investment platform. Investments in private shares and non-mainstream pooled investments of the kind offered on the Mintus platform are speculative and involve a high degree of risk and those prospective investors who cannot afford to lose their entire investment should not invest. You should carefully consider the risk warnings and disclosures for the respective fund or investment vehicle set out therein. The value of an investment may go down as well as up and you may not get back the money you originally invest. An investment in a fund, private company or investment vehicle is not the same as a deposit with a banking institution. Please refer to the respective fund documentation for details about potential risks, charges and expenses. In the most sensible investment strategy for investing in private companies, private companies should only be part of your overall investment portfolio. Further, the private company portion of your portfolio may include a balanced portfolio of different private companies. Investments in private companies are highly illiquid and those prospective investors who cannot hold an investment for the long term (at least 5 years) should not invest.

No Access to FSCS

Investments are not covered by the Financial Services Compensation Scheme and your capital is at risk.

No Guarantee of Dividends

There is no guarantee that any company you invest in will pay dividends or other form of income to you.