Artistic Investment


Following its launch of the retail art investment fund on 31st May, the Collection of Modern Art acquired several new paintings at the London summer art auctions. In line with its stated investment strategy, the Collection purchased Post-War art from deceased or non-producing artists including Pablo Picasso, Andy Warhol, Keith Haring, Yves Klein and Arman. The acquisitions join a collection which already included Jean Michel Basquiat, Lucio Fontana, Jasper Johns and Willelm de Kooning.

Picasso's Dora Maar au ChatWith art prices down around 20-40% since the heady days of 2007-2008, and a decrease in auction sales volumes, the Collection’s managers see a buying opportunity. Constanze Kubern, formerly of Sotheby’s who now advises Castlestone Management on the art market said, “We saw a good level of bidding activity for museum-quality pieces. It looks like there’s still demand in the market, but like us, buyers are taking a more considered approach.

“We’re very pleased with our acquisitions and will continue to seek high-quality Post-War art, but only at the right price,” Kubern said. “Post-War art is becoming more interesting as an investment due to its decreasing supply. We intend to buy Post-War art from deceased or non-producing artists with established reputation, rather than contemporary cutting-edge art which has been subject to speculative buying in recent years. The auction houses also see this as the most solid part of the market at the moment, which helps to validate our investment approach.”

Castlestone Management’s CEO Angus Murray points to news that two large hedge funds (Atticus and SAC) have taken large stakes in Sotheby’s. “Those funds wouldn’t be taking such large positions in an auction house if they didn’t foresee a recovery in art prices and auction volumes. They see value in the auction houses, we see value in art prices”.

WarholThe relative success of recent auctions in London also points to a turning point in art prices. Tobias Meyer, Sotheby’s worldwide head of contemporary art was quoted after the auctions, saying, “The art market is recalibrating itself at a healthy level”.

Mr. Murray, who also co-owns Castlestone Management, launched the Collection of Modern Art as the first regulated retail art investment fund, with a minimum subscription of only US$10,000/£10,000. This stands in stark contrast to other art investment funds which require minimum investments of hundreds of thousands of dollars. The low minimum investment threshold puts art investment within reach of many more investors.

Murray refers to art as an “irreplaceable, unleveraged real asset”, which will respond well in periods when central banks are printing money. Monetary stimulus packages are flooding the global economy with cash and a devaluation of money, leading to inflation, will be the inevitable result.

Castlestone Management believes that museum-quality, Post-War art from deceased or non-producing artists, along with real assets such as gold and other commodities, will be the best bets during the coming period of inflation. “Whenever the value of money falls, as it is doing now, the value of real assets rises, whether it’s art or any commodity such as gold”, Murray said. “Gold and art are running in parallel, both driven by the falling real value of money”.


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