Masterworks – An Investment in Arts

Edit 5 June 2020: Masterworks minimum investment is now US$1,000, instead of $10,000 when they first started.

Technology and the concept of distributed, or fractional ownership, is driving the adoption of what was once investments reserved for the rich and fancy. Big ticket investments like property and art investments are now becoming affordable and aimed at the masses, with companies like Partbnb and Masterworks paving the way in this respect. So today, let’s take a deeper look into the art investment world with Masterworks.

I happened to stumble upon the masterworks site and thought it was interesting. After all, the art market does not have a positive correlation to other asset classes like the equities market, so it could prove to be a good diversification strategy.

Art also seems to be able to hold their value quite well. Plus, who wouldn’t want to be able to say that I own (part) of a Warhol? So, I signed up at the website, and lo and behold, it seems like fractional art ownership is pretty damn popular.

#15,522 on the waitlist. Alrighty then… I should be able to get to own my own art in say… 2047?

How does Masterworks work?

1. The Masterworks team does their research and then buys a painting
2. They then file a circular with the SEC to take that painting public
3. Shares are sold to investors at $20 per share
4. Investors can trade shares amongst themselves (feature not out yet)
5. Whenever there’s an offer to sell the painting, investors will collectively vote for or against
6. Profit!

Membership Interview

After signing up, I was encouraged to arrange for an intro call with a Brian F Moss, an SVP from Masterworks, to quickly go through the product and answer any questions.

The call with Brian was a short 15 minute affair, going through the rationale of investing in art, as a way of diversification, and a new way of investing for the retail investor, who will not have the resources on hand to be able to invest in art otherwise.

However, currently, the minimum investment amount is USD$10,000. When I spoke with Brian, they also only had 1 artwork available for sale, which was the Warhol Coloured Marilyn.

What is Blue Chip Art

Masterworks also focuses on valuing and the purchase specifically of blue chip art. What is blue chip art?

Blue chip art refers to any artwork that’s expected to reliably increase in value over time, regardless of economic environment. Artists like Picasso, Jackson Pollock, Andy Warhol are considered blue chip.

Blue Chip Art Market

Since 2000, the blue chip art market has actually significantly outperformed the S&P500 by over 250%.

So, what do you think? Do you have USD10,000 lying around to own a part of Warhol?