Financial Experts Debate Art Funds

Article excerpt

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 in hopes of repeating stellar returns produced by the boom of the late 1980s. 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 the 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," he said. 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 summer. …

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