Investing in fine art used to require insider knowledge and connections, however, with Masterworks, any investor has the opportunity. If you are a new or experienced investor looking to invest in fine art, here is how Masterworks can help.
Masterworks launched in 2017 as a way to make investing in contemporary art accessible. With over 300 paintings, Masterworks continues to expand and offer investors the chance to diversify their portfolios. They source and vet every piece of artwork and acquire the art from dealers, advisors, and collectors directly. Masterworks focus primarily on blue-chip artists with established reputations such as;
Whether you are new to art investing, or a seasoned collector, Masterworks offers a seamless opportunity for fractional art investing.
Masterworks will purchase a piece of art, then file it with the SEC as a public offering. This is similar to how a company goes public, as shares are then available to purchase. Often these shares can be as low as $20 USD. Usually, Masterworks will launch new art pieces twice per week, giving investors new opportunities to invest. Furthermore, Masterworks tries to focus on artists and artwork that have predictable appreciation rates. This helps ensure that your investment will be worthwhile.
Masterworks offers investors the opportunity to purchase a fraction of fine art, through shares. Thus, making art investing accessible to more people. Then, investors can choose to trade their shares, or wait until the artwork sells to a collector. When a piece of art sells to a collector, each investor is paid out proportionately as per the shares they hold. However, it is important to note that a single investor can not hold more than 10% of a single art piece. It is also crucial to note that investors must be under the age of 70 to use the platform. This is because art investments are viewed as a long-term option.
Fees for investing on the Masterworks platform start with a 1.5% annual management fee. During the sale of any artwork, Masterworks also takes 20% of the profit, with the remaining being split between investors. These fees are in line with standard hedge funds but higher than other investment opportunities. However, fine art can potentially provide much higher returns than other investments.
As fine art investments are viewed as long-term investments, Masterworks aims to hold each art piece for a minimum of 3 years but tries to sell within 10 years. So, after 3 years, Masterworks reviews the market and uses calculations to determine when to list the artwork for sale at a premium price.
The Masterworks platform is well-designed and easy to use. Investors can quickly search for art they wish to invest in. Furthermore, they can view the price the artwork was purchased for, and how much it is currently valued at before buying shares. For those looking to cash out their shares, the trading platform is also easy to use, with a secure payment processing system.
Masterworks is a great fine art investing platform for investors looking to diversify their investment portfolio. However, art is a high-risk investment and has no regular income stream like other investments. Thus, Masterworks may not be the right investment choice for everyone.
