GENEVA -- A recent announcement by Sotheby's former European
chairman Simon de Pury on his plans to start an art fund renews
debate on whether it's wiser to invest in art for art's sake than to
try to make money.
De Pury and his colleague, Daniella Luxembourg, were recently
invited by a small group of unnamed collectors to head a private,
unquoted fund that will invest in art for capital gain. De Pury, who
was the personal curator for one of the world's wealthiest
collectors, Swiss Baron Hans Heinrich Thyssen-Bornemisza, has strong
ties to art collectors.
Yet some financial experts wonder whether an art fund -- or
indeed, any art purchased as an investment -- can live up to its
reputation as a hedge against inflation. And despite admiration for
De Pury's skills, these experts caution that investing in art
presents as many dangers as rewards.
"On the whole, we've taken a rather cautious view" on art funds in
general, said Ian Dunlop, head of the art advisory service of the
London branch of Citibank Private Bank. His company, part of
CitiCorp, considered setting up an art fund, then decided not to.
De Pury's timing in starting the fund has sparked speculation on
whether it's a good time to invest in the international art market
hopes of repeating stellar returns produced by the boom of the late
The Daily Telegraph Art 100 Index, based on the works of 100
artists of different nationalities and periods, rose almost 300
percent between 1987 and October 1990 to 9,560, before plunging just
as much in the following three years. Since the first of this year,
the index has been steadily rising and recently was at 4,353.
Auction houses and dealers have been breaking records recently.
For instance, a Klimt landscape recently sold at Christie's
International for 14.5 million pounds ($23.3 million), reportedly
most expensive work sold in London since 1988.
While appreciation in works of art depends on fads and fashion,
the private collector can have the most influence. When a collector
buys a piece of art and removes it from the marketplace, the work is
perceived to gain in value.
"When it re-emerges 20 or 30 years later, it's the same work,"
Dunlop said, "but the perception of it has changed."
One disadvantage of an art fund, Dunlop said, is that the works
will not be linked with a single collector, someone who confers
status on the work simply by keeping it out sight for many years.
"I don't think a fund can duplicate the magic of the collector,"
De Pury said that whatever art work the fund purchases will most
likely be lent to a museum or institution for public display.
Some art experts express optimism about the concept of an art
fund, while others emphasize their limitations.
"The idea is perfectly all right," said Christopher Wood, a London
art dealer whose book, The Great Art Boom, was published last