Investment in Art

See what the Wall Street Journal says

Art is increasingly seen these days as not just a pretty picture but also as a potentially attractive investment. A variety of major banks and other outfits are looking to art not just for its aesthetic value, but also as an alternative asset class -- much like stocks, bonds and real estate. The reason: Art can juice a portfolio's returns and lower the risk.

For years, private banks, such as those run by J.P. Morgan Chase & Co., Citigroup Inc. and Bank of America Corp., have offered wealthy clients interested in art a variety of services that helped to build their collections, ranging from market research to lending against the value of a portfolio of art so that clients could buy even more art… approach art as an asset class to diversify a portfolio of investments.

Now, a growing number of art-investment funds aim to offer investors an opportunity to acquire a stake in a portfolio of artwork, much like a portfolio of stocks. Funds in the U.S., Europe and elsewhere, such as the United Kingdom's Fine Art Fund, are now raising hundreds of millions of dollars for the purpose of investing in fine art...

Also on the horizon is a so-called fund of funds created by ABN Amro Holding NV that will spread investors' dollars across several of the new art-investment funds. The Dutch banking giant expects to introduce the fund early next year, and is even considering launching its own art-investment fund. ABN Amro also recently launched an art-advisory group, like those offered by other private banks, for its high-net-worth clients.

The move to art is just another sign that investors are redeploying money away from stocks, bonds and cash accounts, and into various hard assets ranging from timberlands to works of art -- items that are so-called stores of value. Adding to its appeal, art has proved to be largely no correlated with Wall Street, meaning that prices move independently from stocks, providing a measure of balance to a portfolio.

The idea is that because the art market "is highly inefficient, there is substantial opportunity to outperform through active management of a portfolio of art," says Bruce Taub, chairman of Fernwood. "Over the long term, the financial trend is that art goes up with the economy."

...........................................................................................................

Is Fine Art a good Investment?

"In 1998, NYU business school professors Michael Moses and Jianping Mei began an unusual experiment. They would track every transaction involving objects that had sold more than once at auction at the major New York houses since 1875..."

The index revealed that fine art was a far more reliable investment than is commonly thought. In the five decades after 1953, fine art appreciated at 10.4 percent, a compound annual rate remarkably close to the Standard & Poor's 500 index, which posted a return of 10.9 percent. Moses and Mei also disproved the hoary maxim that masterpieces make the best investments. They showed that lesser-known (and thus cheaper) works appreciate at a higher rate.

Finally, the index suggested that the art market floats independently from the stock market, giving it resilience against boom-and-bust cycles. Over the last five years, for instance, the art market gained 7.3 percent, while the S&P fell by 2.4 percent. For investors, this is significant. In theory, fine art could be used to minimize volatility in an investor's portfolio. That is why most wealthy individuals and families have a propensity in diversifying their financial holdings into Fine Art while enjoying them at their homes and offices.

...........................................................................................................

The White House

Pride of the American nation, the White House collection of fine arts owes its existence to the scores of individuals and organizations that have nurtured and supported it. They have been diverse in outlook, taste and purpose, but their vision and generosity have given coherence to the collection as a whole.

All the Presidents and First Ladies, including even the Washington’s, though they never occupied the Executive Mansion, have in one way or another made significant contributions.
Gilbert Stuart's idealized portrait of the first President (at right), cornerstone of the collection, both inspires us and evokes calm assurance of national community.

First Ladies of recent decades deserve great credit for much of the art featured in this collection on-line. Jacqueline Kennedy set the goal of collecting works by the country's finest artists. Lady Bird Johnson enthusiastically continued that pursuit. Patricia Nixon's efforts added 18 portraits to Presidents and First Ladies.

Elizabeth Ford, Rosalynn Carter, Nancy Reagan, and Barbara Bush also have taken a special interest in the history of the mansion. And First Lady Hillary Clinton has also made substantial contributions of time and energy to the promotion of art in the White House. In fact, the White House has hosted two exhibitions of twentieth century American sculpture in her term thus far. One of those exhibitions is available on-line. Each recent First Lady has worked tirelessly to encourage contributions of funds and gifts of art.

They, and the collection itself, have been immeasurably helped by former curators of the White House--Lorraine Pearce, William Elder, James Ketchum, and Clement Conger--and by the present associate curator, Betty Monkman, and other members of the curatorial staff. From the care of the White House paintings to the authentication of new acquisitions, these experts have implemented professional standards worthy of the best museums.

Exceptional contributions of time, knowledge, and personal resources on the collection's behalf have come from three men: the late James W. Fosburgh, an original member of Mrs. Kennedy's Fine Arts Committee for the White House; Robert L McNeill, Jr., a longtime member of the Committee for the Preservation of the White House; and the late Dr. Melvin Payne, Chairman of the Board of the National Geographic Society, which cooperated with the White House Historical Association in the publication of the book upon which this on-line collection is based and other books about the presidential residence. The Association, chartered in 1961, has been a major benefactor, making possible the acquisition of dozens of works of art. Today it continues to "enhance understanding, appreciation and enjoyment of the Executive Mansion".