Art Funds

A simple way for people who are interested in investing in art is by way of Art funds. Art funds work in a similar manner like mutual funds and aim to deliver returns by investing in a well-diversified portfolio of select art works. Such art works may be created by a range of Indian artists, both - masters as well as amateurs.

The Indian contemporary art has a very inspiring infrastructure of art schools, art galleries and dealers who are networking across the world to ensure its success.

• Lower investment is needed as compared to other investment options

• Economies of scale accrue with respect to costs such as gallery commission, etc

• Professional advice and expertise is available

• Infrastructure to conduct research is already available

Art funds generally consist of resources that are pooled together by individuals until an adequately large corpus is created. This money is then used to buy pieces or works of art either from the artists directly or from the possessors through exhibitions. When the art pieces are sold, the profits obtained from the same are then distributed to the investors. In India, Osian’s Art Fund, Crayon Capital Art Fund, Yatra Art Fund, and Copal Art Fund are a few art funds available in the market.

According to some financial planners, an art fund as an investment choice not only offers an unlimited scope for receiving high returns but also shares a contrarian trend with equity markets that safeguards one’s portfolio against existing market risks. Hence, art funds offer that extra cushion against the losses from other investments.

However, it should be noted that art funds are not governed by any laws or regulations. Thus, evaluations, valuations and NAV remain unclear. It becomes all the more important to go through a reliable and investor-friendly fund with integrity, expertise, and an impressive past track record.

Art Funds in India

A few art funds available in India are:

• Osians Art Fund - This fund was launched in April 2006. It is being promoted by Neville Tulli. The fund manages about Rs. 100 Cr of assets.

• Crayon Capital - This fund was launched in November 2006 and is managed by an asset management company with the same name. The partners are Gaurav Karan and Amit Vadehra. The fund has launched one fund of Rs. 40 Cr in November 2006.

Features of Art funds

The general features of art funds are:

• High minimum investment - about Rs. 10 lakhs
• Have a lock-in period of 3 years
• Investors get units allotted for their investments
• Investor does not get to see the art work

The art buyer is no more only from the elite crowd or belonging to an industrialist family. Entrepreneurs as well as the educated class are entering the art market like never before. Moreover, the market for Indian art is also gaining popularity on foreign shores.

Indian art is seeing unprecedented appreciation over the years. There is excess liquidity in the economy which is funding the surge in the art market. There is an expanding pool of new artists and the potential of appreciation in the prices of their work is also immense. At the same time, there is greater liquidity for the senior artists.

The art market is on its way to the next momentum by promoting more credibility, transparency, and increased information availability. The Indian art industry would be taken to the next level when a sound financial infrastructure, support of banks and insurance companies, and the development of the market are backed by a mature knowledge base.