GLOBAL - Art as an asset class has historically outperformed equities and deserves a place in any significant investment portfolio, a latest research published by Castlestone Management has claimed.
The paper Is Art an Investable Asset Class? found art delivered an average annual return of 7.7% a year between 1875 and 2000, compared to a return of just 6.6% from equities.
It describes it as an "unleveraged, irreplaceable real asset", which many investors turn to as a safe haven in times of economic uncertainty - and which helps diversify investment portfolios.
The paper cited the example of the British Rail Pension Fund. It said beginning in 1974, British Rail used 2.5% of its total pension fund to amass a broad portfolio of some 2500 pieces of art, which was sold off at Sotheby's from 1987 to 1999. Its annualized return was 11.3% from 1974 to 1999.
The research also compares this asset class to gold and explains how both types of investment are used to hedge against inflation. It said: "When the value of money declines, the value of real assets such as art rises. In recognition of this fact, several respected financial institutions have already begun to allocate to art."
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