Understanding Fractional Fine Art Investing
As alternative investment platforms such as Yieldstreet have become increasingly popular, fractional ownership of fine art has also risen. That’s largely because, the way such investments are structured, investors are allowed to just buy shares of artworks, with each share representing a percentage of total ownership. Another major plus is that such investments are not directly tied to the stock market, which means investors can reap gains even amid a Wall Street slowdown.
Read on to understand more about fractional fine art investing.
The Issue
For time immemorial, the high-end art world has been off-limits to “regular people.” Headlines abound about how famous works sell at auctions such as Sotheby’s for millions of dollars. But what’s happening is that, even if you aren’t interested in “blue-blood” works, fractional investing is democratizing the art market and offers a way to diversify your portfolio.
What are the Benefits of Art Investment?
It’s worth noting that investing in art in general provides a hedge of protection against not just the ups and downs of the stock market, but also inflation. According to Lexology, the art market last year performed better than 10 major asset classes. That was especially true online, where those sales reached a record $12.4 billion, twice that of 2019. And over the last 25 years, contemporary art has done better than the S&P 500 index by nearly threefold.
Just What is Fractional Fine Art Investing?
Fractional fine art investing essentially permits you to purchase shares of art, rather than buying the whole work outright. The practice makes fine art investing more accessible, particularly in the Digital Age. With platforms such as Yieldstreet, you can access a cache of works by emerging, blue-chip, and mid-career artists – with a single investment.
How Do I Begin Investing in Art?
Traditionally, if you wanted to invest in art, you had to go through dealers or auction houses, or frequent art fairs. You still can, but unless you have industry connections, buying physical works outright can be prohibitively pricey and challenging.
The digital art space has changed all that. While the traditional vehicles still exist, you can now invest in shares of art and in loans backed by artworks that produce monthly income.
What About Returns?
It depends on the platform, but the main thing to keep in mind that because each offering has its own payment terms, you must scour offering materials. What commonly happens is that art-backed loans pay monthly interest with principal repayment occurring upon loan maturity.
How Do I Evaluate Art Investment Opportunities?
If you’re interested in art, even as fractional investments, you should take steps to understand artists and their markets. Check to see whether an artist you’re interested in has grown their brand, and whether that growth has been sustained.
At Yieldstreet, investment decisions are based on third-party appraisals and expertise, backed by analyses from a proprietary database run by Athena Art Finance. This takes all the guesswork out of art investing. The wholly owned Yieldstreet subsidiary has funded more than $400 million of fine art investments.
Now that you understand fractional fine art investing, you know that the practice makes investing in art more accessible, without concerns about stock market whims. Such investments also protect you against inflation. If you’re interested in art or simply want to diversify your portfolio, you can explore such opportunities through Yieldstreet, an alternative investment platform that generates passive income streams for investors through art and other asset classes. And you don’t have to write a humongous check to get started.
