Art: An attractive asset to hold
No doubt, equities have delivered fantastic returns over the last decade or so. However, stock markets world over have turned topsy-turvy in recent times. The market indices have become hyper-sensitive to inflation, sub-prime, crude oil price hike, recession and any hint of negative macro or micro-economic news.
The risk-reward ratio, as a result, is getting highly skewed. At this point of time, experts are advising investors to stay away from the stock markets, and rightly so! Where would you then park your hard-earned money to safeguard and grow it? Is there a way to assured wealth creation in these uncertain times?
A study of investment pattern of high net worth individuals and non resident Indians, as to find out where they are investing their money, throws up an interesting answer; it’s art! A diversified portfolio of investments guided by structured asset allocation approach holds key to building wealth.
You as an aware investor constantly need to upgrade the quality of assets in your investment basket. This means, you should be willing to look beyond traditional means of investment, and widen the scope of your portfolio by including alternative investment options.
No surprise, investing in art is now gaining prominence and acceptance around the world. Indian art is slowly but surely turning a crucial and key component of an alternate investment portfolio. Indian art is drawing deserved attention and valuation. Investing in art, in a sense, is an art in itself! Bringing this to fore, Michael Moses, a professor at New York University’s Stern School of Business, has mentioned in an elaborate essay on the subject: "There are three beauties in some sense in art. The joy of collecting, meeting with people, talking with people, two, the excitement of the hunt, the beauty of the object; and three, there is the diversification potential of art in a portfolio".
His take on the topic from a layman’s perspective is: “You might think you can’t invest in fine art, but you most probably can.” Coming from an expert who has been tracking investment in art as a trend with a lot of data to back his statement, the comment should settle the debate in favor of art as alternative investment.
The increasing activity of prominent art auction houses, art galleries and art institutions has laid the foundation for a solid secondary market, which buyers can access. Art is no more viewed as a mere object of pleasure but also an attractive asset to hold. Importantly, the art market has grown more matured, more sound and more transparent. Not so long ago, buyers and collectors could compare prices only by attending auctions and rummaging through heavy catalogues. The scenario has no doubt changed.
The process of acquiring art has become more ‘democratic’, so to say. Also, the buyer base is rapidly expanding! The growth of services and expertise backed by market infrastructure and mechanism within the art world is now more pronounced.
