Art as an Asset Class

Introduction

 

Recently, Thomas S. Kaplan, the foremost private collector of Dutch Golden Age paintings, announced plans to fractionalise his collection of over 200 works by 17th-century artists, including Rembrandt van Rijn, Frans Hals, and Johannes Vermeer, through an IPO, possibly to be traded on the New York Stock Exchange. The collection, known as the Leiden Collection, is currently touring museums worldwide, attracting wider public recognition and potentially increasing the value of the individual works. In an interview with The Art Newspaper, the collector expressed his aim to make his collection publicly accessible as an asset, as none of his children wishes to inherit the artworks themselves.

 

This news story marks the latest peak in the growing financialization of art, with artworks increasingly viewed as an alternative asset class. Does this development indicate potential stability in a maturing market or suggest it has reached peak commerciality, as some critics claim? Interest in the financial value of art is by no means new. The earliest known art investment fund was established by French investor André Level in 1904, called “La Peau de l’Ours” (“the skin of the bear”). It involved 12 investors buying 145 works by 40 artists, and they successfully sold the collection at auction in 1914, multiplying their initial investment fourfold. Despite this success, the concept didn’t become widely popular. Only over the past twenty years have art funds and other initiatives treating art as a professional asset class—beyond personal collection and advice—grown more common. There are several reasons for this slow progress, including concerns about liquidity, societal stigma associated with selling one’s collection, taxation, and other factors. Throughout the 20th century, the main reasons for the dissolution of a collection have been the three Ds: Divorce, Debt, and Death.

What has changed and why is art now a common topic in the news, at conferences, and in the broader public sphere? More importantly, what do collectors, art enthusiasts, and buyers need to understand if they are considering art as an asset class?

 

 

 

What Does It Mean to Treat Art as an Asset Class?

 

1. Changing Values

 

Art means different things to different people. It has various values, including sacred, historical, sentimental, personal, political, and symbolic ones. As a commodity bought and sold in markets, it often carries financial value. Notably, successful auctions of artworks have demonstrated that art can be used to grow wealth, either by saving it or selling it for a profit.

The shift from appreciating art for its aesthetic value to viewing it as a financial investment is linked to the decreasing length of time collectors today hold their collections – from not selling throughout a lifetime, to a generational span, and now often only “flipping” works after 2-4 years. Some individuals who see art as a financial tool speculate with it through high-risk, short-term deals, while others adopt a long-term perspective. However, even they might use art as collateral, for example, borrowing money against their holdings.

 

 

2. Performance of Art as an Asset Class – data and disputable developments

 

Apart from changing collecting habits, the reason why art is regarded as an asset class relates to the rise of data-based art price reports, beginning with the Mei Moses Art Index in 2000. The use of quantitative data to model the price development of art objects has become increasingly significant at the higher end of the art market. While price databases and financial reports have supported an understanding of the implications of viewing art as an asset class, such as quantifying risk, return, and diversification potential, they have also transformed our approach to art collecting and have informed a new wave of art finance companies entering the market. The arrival of firms offering advice through generative AI models is only the tip of the iceberg.

The frequent release of art market reports and the media attention they attract, often swayed by interested parties, reflect this trend. Sotheby’s commissioned ArtTactic to produce a report on the increasing value of Surrealist art and the overall expansion of this niche market segment, launching it alongside the sale of the Pauline Karpidas London collection in September 2025. The reports highlight financial stability and growth prospects, emphasising the economic view of art as an investment. However, there are risks involved in adding art as a percentage to a financial portfolio that not everyone fully understands.

 

 

What makes art as an asset class special?

 

• As a heterogeneous good, often comprising unique and rare objects and artworks, pricing is inherently unstable. Purchase prices, insurance values, and final sales prices may vary considerably and do not always yield a positive return. Numerous academic models of past art investment cycles demonstrate this.
• Art is an expensive asset to own. It requires insurance, storage, and transportation, and may incur taxes and other costs; furthermore, it does not generate dividends or other forms of income. Selling expenses are high, typically comprising the seller’s fees at auction houses or galleries' commissions, often around 20 per cent of the sale price. Christie’s specialist and art market expert Dirk Boll suggests in his publications that art must increase in value by at least 50 per cent (compared to the purchase price) to be a viable investment.
• Taste changes. While artists in the blue-chip segment of the market, such as Andy Warhol or Pablo Picasso, often hold steady values, volatility in speculative markets is high. This has recently become apparent with the loss of attraction in the ultra-contemporary market, whose bubble has been deflating since 2024.

• Art is not an asset that can be easily liquidated, particularly if a substantial amount of work held in a fund needs to be auctioned or sold off all at once. Many art funds have quietly shifted their focus from traditional fund offerings to art advisory and collection-building services. ‘Cashing in’ on artworks is difficult and often costly, leading to decreasing profits or even losses. 

 

 

However, there are also positive perceptions in treating art as an asset.

 

• Art is often viewed as less vulnerable to financial and other market fluctuations, making it a safer store of wealth.
• Its dual role as both an economic asset and potentially aesthetically pleasing is a beneficial combination.
• As art gains wider recognition as an asset class, it can be used to secure loans. The growing involvement of Sotheby’s and Christie’s as financial institutions offering art lending services indicates this trend.

 

 

What are the main financial services utilised in the market?

 

• Direct art buying is still the most dominant form of art investment.
• Art funds are collective investment schemes that pool money from investors to acquire a diverse range of artworks. They purchase and manage art similar to other funds. The goal is to sell these works upon maturity and generate profits from the sale, which are then redistributed to investors.
• Art-backed lending enables you to utilise artworks as collateral to secure a loan. Many private loan companies, alongside banks, auction houses, and now even storage providers, offer loans against art.
• Fractional ownership denotes the fractionalization of an artwork, which allows buyers to purchase shares or tokens of the artwork as a percentage of total ownership. Traditionally, artworks could be co-owned by two dealers; however, digital technologies now allow for much smaller percentages of works to be owned. However, as a trend, it is only being embraced by younger generations and has yet to become mainstream.

 

 

What are the risks involved in participating in this trend?

 

• Data on positive price developments often originates from the upper end of the market. Not everyone can access this segment financially. While there is a growing interest in purchasing prints and editions by blue-chip artists, these do not always appreciate. Not every Warhol will maintain its worth, and having a solid understanding of the specific work or a good advisor is crucial.

 

• Many see the fractionalisation of art as a way to allow anyone to invest in art; however, the lack of historical data or recent trends makes this an untested method of engaging with art ownership for financial purposes. New companies flood the market, and thorough due diligence is essential.

 

• There is a lack of financial and regulatory oversight of these new companies, which promise high returns on investment. Anyone who wishes to participate in this market should only work with established and trusted firms.

 

 

Why is it still something to consider?

 

• Art regarded as an investment might be taken more seriously than if it is viewed merely as a part-time pursuit. This should ideally involve due diligence, proper collection care, and consideration of its role in legacy issues. Hopefully, well-managed art collections will retain their value for both present and future generations as part of a larger estate planning strategy.

 

• A collection is always more than the sum of its individual works of art and provides value in its own right. It is a personal story of life, taste, and perhaps passion, as seen in the above Karpidas collection, which consisted of masterworks as well as smaller, day-to-day design objects. As extensive collections are set to come on the market, the desire to preserve their legacy becomes relevant.
   
• Art as investment is often used as a way to protect against inflation. In times of economic stress, art is usually perceived as more stable, in addition to being tangible.
   
• Lending against art can be a quick way to liquidise money to re-invest in art, a practice that auction houses are involved in. This is also interesting for galleries and dealers with stock who can borrow against their inventory.
   
• Specialised advisors service art as part of a wider luxury or collectables portfolio. Other collectables that have increased in value in recent years include wine and other spirits, jewellery and watches, and classic cars. The closer alignment between luxury assets and art is rising.

 

 

 

Final Tips:

 

Always ensure you work with reputable galleries, dealers, or advisors who represent your interests and have expert knowledge of both art and the financial assets they recommend. While many online platforms are emerging, collaborating with established advisors remains essential. Conducting due diligence is just as important with art as with any other investment. As the market for ultra-contemporary art has shown, trends come and go. Start with established mid-tier works that have potential to increase in value. If you purchase works directly and live with them, ensure they are properly cared for, including insurance, storage, and display. Also, consider ways to promote the works through publications or by lending them to exhibitions. Lastly, remember that art is an investment that involves significant risks and costs, so avoid investing in something you do not understand or are not passionate about.

 

 

 

Further Resources:

Adam, Georgina, ‘The rise of art-backed loans is spectacular—here's how they work’. The Art Newspaper. 8 March 2023. https://www.theartnewspaper.com/2023/03/08/art-loans-spike-as-specialist-lenders-multiply.

 

Boll, Dirk. Art and Its Market. Hatje Cantz, 2024.

 

Deloitte, Art and Finance Report 2023. https://www.deloitte.com/content/dam/assets-zone2/lu/en/docs/services/financial-advisory/2023/art-finance-report-2023.pdf.

 

McAndrew, Clare. The Art Basel and UBS Global Art Market Report 2024. Art Basel and UBS, 2024.

 

Reaburn, Scott. ‘Picasso or Bitcoin? How art’s status is changing among the super-rich’, The Art Newspaper, 19 September 2025. https://www.theartnewspaper.com/2025/09/19/picasso-bitcoin-how-status-of-art-status-is-changing-among-super-rich