Masterworks: Investing in Fine Art Shares in a Nutshell

The World of Fine Art Investing with Masterworks

Investing in fine art has long been considered a luxury reserved for the wealthy elite. However, with the emergence of online platforms like Masterworks, the world of fine art investing has been democratized, allowing ordinary investors to participate in this unique asset class.

In a Nutshell

Masterworks is an online fine art marketplace where investors can buy and sell shares in some of the top contemporary art pieces in the world. By investing in fine art, investors can diversify their portfolios with an asset class that is non-correlated with traditional financial assets like stocks and bonds.

Masterworks Investing Synopsis

• Minimum Investment: $15,000 for newly issued artwork
• Investments Offered: Fine art/paintings
• Fees: 1.5% per year + 20% of profits on sale
• Investment Term: 3 to 10 years
• Available Accounts: Taxable investment accounts, traditional and Roth IRAs
• Customer Service: Phone and in-app email

Masterworks Investing Overview

Fine art is a unique alternative asset that is non-correlated with the financial markets, offering investors the potential for diversification and risk mitigation. Masterworks allows investors to buy shares in individual art pieces without the need to take physical possession of the artwork.

While investing in fine art through Masterworks provides the opportunity to participate in the art market, it comes with a high fee structure and limited liquidity. Investors must rely on Masterworks for artwork valuation and appraisal, as fine art is a specialized asset that requires expert evaluation.

Masterworks Investing Features and Services

Masterworks focuses on iconic contemporary artists and securitizes their artwork, making it available for investment through their platform. Investors can purchase shares in individual art pieces, with a minimum investment of $15,000 for newly issued artwork.

With over 800,000 participants and $900 million in assets under management, Masterworks offers investors the opportunity to diversify their portfolios with fine art investments.

What Masterworks Offers

Masterworks targets the top 100 contemporary artists and purchases artwork directly from major auction houses, private collectors, and galleries. The artwork is securitized and made available for investment through the Masterworks platform.

Investors can hold shares in art pieces for 3 to 10 years, with the potential to sell their shares on the online marketplace. Masterworks retains 20% of any profits on sold artwork, while investors receive 80% of the profits.

Investment Performance

Masterworks publishes investment returns showing the performance of contemporary art compared to the S&P 500. Fine art has provided an average annual return of 12.6% between 1995 and 2022, outperforming traditional financial assets like stocks.

While past performance of fine art investments has been impressive, there are no guarantees of future performance, and investors should approach this asset class with caution.

Who is Masterworks Investing Best For?

Masterworks can be a good choice for investors with moderate to large portfolios looking to diversify with alternative assets. Fine art investing is best suited for those who are familiar with the unique characteristics of this asset class and are willing to hold long-term investments.

Due to the high minimum investment requirement and the specialized nature of fine art, Masterworks may not be suitable for beginners or small investors.

How Masterworks Investing Compares

For investors looking for alternative investment options, platforms like Yieldstreet and Rally Rd offer a range of alternative assets beyond fine art. Each platform has its own unique features and fee structures, catering to different investor preferences.

Conclusion

Masterworks offers investors the opportunity to participate in the world of fine art investing, diversifying their portfolios with a unique and non-correlated asset class. While there are risks and limitations associated with investing in fine art, Masterworks provides a platform for investors to access this exclusive market.

As with any investment, it’s important to do thorough research, understand the risks involved, and consider your investment goals before diving into the world of fine art investing with Masterworks.