Art and Collectables as Alternative Asset Classes Performance and Diversification Benefits

Art and Collectables as Alternative Asset Classes Vilnius January 2010 Dr.Iain Robertson Head of Art Business Studies Sotheby’s Institute of Art

Emotional assets of High Net Worth Individuals (HNWI) Cap Gemini World Wealth Report (2007)

The problems with the value of art as an asset class ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Caveats ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Average real returns 1975-2005 ,[object Object],[object Object],[object Object],[object Object],[object Object]

Downside / Upside ,[object Object],[object Object],[object Object],[object Object],[object Object]

Downside market returns ,[object Object],[object Object],[object Object]

Rising interest rates ,[object Object],[object Object],[object Object]

Diversification (1978-2003) ,[object Object],[object Object],[object Object]

Correlation: 1970-2005 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Correlation Indices Full period: 1976-2009 (Deloitte, 2009) Much higher levels of correlation compared to previous analysis. AAI ranges from 10% over 20 year period to 45% over last two years. Modern and Contemporary is between 52% and 59%. Old Master is 0. Full period is from January 1976-end of March 2009. 20 year data from March 1989, 10 year data from March 1999, 5 year data from March 2004, 2 yea data from March 2007, and 1 year data is from March 2008. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Emotional asset correlations ,[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object]

Relative performance ,[object Object],[object Object]

12 Month moving averages. Annual Standard Deviation and Annual Average Return (right) (Jan 1976-March 2009) (Deloitte, 2009)

Performance of art relative to equities:1976-2009 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Portfolio weights (Art 2005) Those average returns after transaction costs would have to increase considerably today (2009) in order for art to be included in an investment portfolio, because art is longer as good a diversification as it was. (B.C,2005) ,[object Object],[object Object],[object Object],[object Object]

The British Rail Pension Fund 1970-1990 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The BRPF 1974-2000 data in summary ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Vincent van Gogh (1853-1890) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Auguste Renoir (1841-1919) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Claude Monet (1840-1926) Paul Cezanne (1839-1906)

Auguste Renoir (1841-1919) Pablo Picasso (1881-1973)

Vincent van Gogh (1853-1890) ,[object Object],[object Object],[object Object],[object Object]

Pablo Picasso (1881-1973) ,[object Object],[object Object],[object Object],[object Object],[object Object]

Picasso’s turnover 2004-2008

US$ Price in Black 2006 Equivalent $ Price in Red 1975/6 355,000 1.31m 130,000 460,000 1988/9 1.75m 385,000 616,000 992,000 1.67m 1993/4 1.75m 971,000 1.3m 616,000 1.16m 1.59m 2005/6 27.6m 5.2m 17.2m 12.8m 6.05m 4.7m 15.6m

Yuan blue and white 1-6 All prices adjusted ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

ZHANG Xiaogang, Family and friends in 1999 when his canvases were selling from $20,000-$30,000

Chen Yifei 1946-2005 ‘ Four Graces’ Guardian, Beijing (Oct 1997) 2.3million RMB ($278,985)

Artists price Work of art Auction house Hirst, Damien £ 9.2million Golden Calf (2008) 15/09/08 SL Hirst, Damien £ 8.5million The Kingdom (2008) 15/09/08 SL Basquiat J.M. $12million The Boxer(1982) 12/11/08 CNY Hirst, Damien £6.6million Fragments of Paradise (2008) 15/09/08 SL Basquiat J.M. £4.5million Untitled (1982/3) 01/07/08 SL Prince, Richard £3.8million Overseas Nurse (2002) 01/07/08 SL Chen Yifei 36.1million RMB 3.8million Euros 29/05/09 Poly Int Auction Co Basquiat, J.M. $5.1million Master (1982) 13/05/09 C/NY Currin, John $4.8million Nice ‘N Easy (1999) 05/14/08 S/NY Prince, Richard £2.8million Dude Ranch Nurse 2 2002-2003 19/10/08 C/L

ZHANG Xiaogang b. 1958 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Chen Yifei (1946-2005) Eulogy of the Yellow River 143.5cmsx297cms Guardian, Beijing 2007 $4,694,400

Contemporary art index 1998- July 2009

The facts about the contemporary art index ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Contemporary art sold at auction according to price range in 2008

Artist 2008 nationality Turnover in Euros Lots HP in Euros Jeff Koons. 1955 US 81,320,082 91 14,536,000 J.M Basquiat. 1960-1988 US 63,678,955 82 7,747,060 Damien Hirst. 1965 UK 53,618,722 233 6,015,660 Richard Prince 1949 US 38,779,852 105 4,268,880 Zhang Xiaogang 1958 CN 38,596,196 109 3,449,698 Zeng Fanzhi 1964 CN 33,247,544 75 5,452,460 Yue Minjun 1962 CN 33,189,462 63 3,906,239 Takashi Murakami 1962 Japan 18,551,301 189 8,706,150 Wang Guangyi 1957 CN 14,018,995 78 2,578,140 Liu Xiaodong 1963 CN 13,073,121 31` 4,663,950 Cai Guoqiang 1957 CN 12,098,050 60 5,721,540 Yan Pei-ming 1960 CN 11,903,476 46 1,112,320 Chen Yifei 1946-2005 CN 11,597,274 57 2,033,900 Fang Lijun 1963 CN 11,469,122 43 2,469,240 Liu Ye CN 10,599,527 40 859,080

The Zhang Xiaogang, Yue Min-jun and Fang Lijun markets soften at Sotheby’s and Christie’s in London in 2008 col 1, NS col 2 Res, col 3, LE, col 4 ME, col 5 AE

Zhang Xiao-gang (1958) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

HK Modern and Contemporary Asian Art sales, October 2008 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Artist 2009 nationality Turnover in Euros Lots HP in Euros Damien Hirst 1965 UK 134,738, 980 381 11,606,720 J.M Basquiat. 1960-1988 US 31,711,998 47 9,450,000 Richard Prince 1949 US 24,259,378 61 4,763,395 Jeff Koons 1955 US 23,029,764 110 3,525,600 Peter Doig 1959 UK (19) 12,286,070 41 3,116,400 Zeng Fanzhi 1964 CN 11,079,290 42 1,044,560 Zhang Xiaogang 1958 CN 10,063,748 39 2,346,000 Takashi Murakami 1962 Japan 8,122,040 271 2,362,500 Anish Kapoor 1954 UK/India (18) 6,795,240 31 2,173,220 Chen Yifei 1946-2005 CN 6,658,129 21` 3,815,770 Yue Minjun 1962 CN 5,863,104 33 1,018,000 Subodh Gupta 1964 India (24) 5,770,707 20 679,582 Anthony Gormley 1950 UK (140) 4,795,667 20 2,552,270 Zhou Chunya 1955 CN (17) 4,493,420 51 641,700 Cai Guoqiang 1957 CN 4,419,905 37 1,395,750

The state of the Chinese contemporary art market and its young blood at the end of 2009

Tobias Meyer in the process of selling Peter Doig’s ‘White Canoe’ for £5.7million (est: £800-£1.2) in 2007

The rise and rise of Peter Doig (b.1959) ,[object Object],[object Object],[object Object],[object Object]

And rise of Peter Doig ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Peter Doig: Night Playground (1997-1998) £2.65million , against a high estimate of £2million (Highest price since White Canoe) Christie’s< New York November 2009

Peter Doig: Night Fishing (1993) 200cmsx250cms $4.1 million(£2,697,800). Est: $3-4million . Christie’s New York May 2009

How Record prices affect future estimates ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Fine wines ,[object Object],[object Object],[object Object]

Bordeaux and the grands crus classes – premier – cinquieme the 1855 Official Classification of Bordeaux Pomerol St-Emilion Graves Medoc Sauternes Two subs Mouton –Rothschild (1973) First growth Lafite, Mouton, Margaux, Haut-Brion and Latour Super Tuscans Late 1980s Californian Cult wines Napa Valley Burgundy

How to invest in fine wines ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Ten tips to buying ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Between 1988 and Summer 2008 (peak of market) the index had risen 183% ,[object Object],[object Object],[object Object]

Plunging markets ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Growth in demand for wine from HK and China ,[object Object],[object Object],[object Object]

Bibliography ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Art data sites ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Art and Collectables as Alternative Asset Classes Performance and Diversification Benefits

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