Buying and selling fine art has long been a niche investment area. Previously only accessible to the wealthy, Masterworks is a US-based platform that lets investors around the world invest in works of art.
Beginner and experienced investors alike can buy stocks in art securities without directly owning or storing artwork. Masterworks researches and buys art assets, sells fractional shares in those assets to investors, then sells the artwork and distributes the proceeds. Investors can buy and sell their shares like they would with similar securities.
Masterworks does the hard work, so novice investors can buy in even if they’re not very familiar with the art world.
Consider Masterworks if you want to invest in fine art and you are okay with above-average risk.
Look elsewhere if you have a low tolerance for risk or don’t want to wait 3-10 years to receive your profit.
How easy is it to use Masterworks?
Investing in art with Masterworks is about as easy as opening a bank account and making your first deposit. You’ll need to provide your personal information like your name, address and banking information. You’ll also need to put up an initial deposit.
There is no minimum deposit required to open an account. Masterworks representatives work with investors individually to settle on your ideal investment amount based on your goals. You can invest as little as $20 USD into a piece of art. Masterworks also requires a phone interview to approve your application.
Once your account is open and funded, you can browse a broad selection of artwork on the Masterworks website and buy stocks.
Is art a good investment?
Art can be a good investment, but it involves a high risk of loss and a high potential for gain. As is the case with investing in stocks, investors in fine art should have a high tolerance for price fluctuation both short- and long-term.
According to Artprice, the average annual return for its blue-chip art index has been higher than 30% since it began tracking prices 20 years ago. But keep in mind that this is an average. Some pieces of art could have appreciated at a faster rate, while others could have produced much lower—or even negative—returns. There’s no guarantee that you’ll see positive returns.
Blue-chip art refers to artwork that is expected to retain its value, and has the potential for future growth. Generally, blue-chip art includes piece by well-known artists you’d see in museums. Examples include masterpieces by artists such as Andy Warhol and Claude Monet.
Masterworks pricing and fees
Masterworks charges a management fee of 1.5%, which is comparable to management fees charged by professional investment advisors. Masterworks also receives 20% of future profits made from selling the art. This commission is expensive but is comparable to what a hedge fund may charge its investors.
Minimum Investment
None
Fees
1.5% annually, plus 20% at sale
Investment time frame
Typically takes 3-10 years to receive your proceeds
The 1.5% management fee covers professional storage, insurance, administrative costs, regulatory filing and annual appraisals.
Is Masterworks legit?
Headquartered in New York City, Masterworks was founded in 2017. As an investment company, Masterworks qualifies its art with the Securities Exchange Commission (SEC), a US government entity that protects the interests of investors. Masterworks is registered with the Better Business Bureau (BBB).
Masterworks reviews and complaints
Since Masterworks hasn’t been operating very long and their artwork typically requires a 3- to 10-year holding period, the company’s track record is insufficient to capture the full user experience. As of November 2020, it has zero complaints with the BBB and only one review on Trustpilot with a score of 2.8.
Negative customer comments about Masterworks are generally complaints about difficulties communicating with company representatives, high fees and long holding periods on the art.
Masterworks pros and cons
Pros
Invest in fine works of art without directly holding or storing artwork.
Potential for long-term growth of capital that exceeds the stock market average.
Access to prevented fine works of art without the need for expertise in the art industry.
Cons
High management fee and commission.
3- to 10-year waiting period to receive profit.
Interview required to receive an invitation for membership.
How do I sign up?
To sign up for Masterworks, the process requires just a bit more effort than opening an account with a bank or brokerage firm.
Visit the Masterworks website.
Request an invitation to join.
Conduct a phone interview.
Open a trading account.
How do I contact Masterworks support?
Masterworks can be contacted by phone or email. Visit the company’s website at www.masterworks.io for more information.
Compare alternative stock trading platforms
If you’re not sure whether investing in art is the right option for you, consider other investing options. These platforms can help you create and manage diverse portfolios of stocks, bonds and funds. Check out our guide on opening a stock trading account to learn more.
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If you want to invest in art but don’t know where to begin, Masterworks offers a platform where you can start investing without any prior knowledge of the art industry. Keep in mind that investing in art can be riskier than the stock market but potential returns can also be higher. If you are more risk-averse, explore more investing options.
Frequently asked questions
Since the Masterworks team consists of art experts and advisors, investors do not need any prior art knowledge to invest.
You choose from among a preselected portfolio of artwork that has been vetted and purchased by Masterworks experts.
There is a hold requirement on art for 3-10 years before artwork is sold and profits are distributed to shareholders. If you need to make a withdrawal before the holding period, you can sell your stocks to other investors in a secondary market.
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