Investors eschew Wall St. for Wall Art

  • August 12, 2009 16:00

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Art Basel Miami Beach, the sister show to Art Basel in Switzerland, is a major annual contemporary art fair enjoyed by some members of the fund.
anna balboa

Inflation may be lurking around the what are stock market-skittish Americans considering as investments? Oil, gold, and great art---assets which some experts consider positioned to perform well in the next market upswing.

For aesthetically-inclined investors, The Collectors Fund is a novel approach to both enjoying art in the home and diversifying a financial portfolio.

With a minimum $120,000 investment, members buy-in to the two-year-old art fund. It's a long-term play with a bit of instant gratification. Members bid (using votes derived from the level of their investment) on the fund's artwork to display in their own homes on a rotating 100-day basis.

Thus, an ever-changing, multi-million dollar art collection can be enjoyed by hundreds of members over the fund's ten-year life.

The investment also comes with art education, networking, and social perks.

Fund members are invited to a bevy of dazzling events: tours of Art Basel Miami Beach, cruises on the Forbes Highlander yacht, parties with artist Frank Stella in New York.

The Collectors Fund purchases 20th-century American art, especially works priced in the middle third of the fine art market, from about $50,000 to $500,000, which executive chairman and founder Alexander "Sandy" Kemper considers the most liquid and historically best performing price parameter.

The Collectors Fund members were invited to celebrate with Frank Stella on his birthday.

“When you can diversify into an asset — museum-quality art — that has outperformed and is uncorrelated to the equity markets, it represents a pretty significant opportunity,” Kemper told the Kansas City Business Journal.

Kemper is a member of the well-known banking and art collecting family with the eponymous museum in Kansas City, where the fund is based. He also founded eScout, an e-commerce solutions provider for businesses, and recently joined the board of AXA Art Insurance Corp.

The fund is poised to buy $10 million to $15 million of art each year. Whenever market conditions are right, the fund will sell works.

In order to avoid mark-ups from commissions and fees charged by some galleries and auction houses, acquisitions are often sourced from private collectors and artists directly.

The fund managers, in collaboration with curators and the fund members, work their connections to find just the right "deals" to fit the current American Masters Collection portfolio.

One of the fund's strategic advisers is Andrew Littlejohn, a founder of Meridian Art Partners, the art investment firm in New York.

After one year, the collection's appraised value escalated by 20%. The S&P 500 total return index fell 37 percent in 2008.



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