Learn how to invest in fine art without buying it.
Buying and selling fine art has long been a niche investment area. Once only accessible to the wealthy, Masterworks is a platform that enables investors to invest in works of art. Beginner and experienced investors alike can buy shares of art securities without directly owning or storing the art.
- Consider Masterworks if you want to invest in fine art and you are okay with above-average risk for the potential of above-average returns.
- Look elsewhere if you have a low tolerance for risk or don’t want to wait three to 10 years to receive your profit.
How does Masterworks work?
Masterworks purchases artwork and securitizes it to create shares available to investors. This art has been called blue-chip art because — like blue-chip stocks — they are generally high-value investments that are expected to increase in value over time.
Multiple investors can buy and own shares of the art without holding or storing the underlying physical asset itself. Masterworks also does the research and selects the art, which means that a novice can invest without having any connection to the art world.
How easy is it to use Masterworks?
Investing in art with Masterworks is about as easy as opening an account with a bank and making a deposit. It requires your personal information, such as name, address and banking information, as well as your initial deposit.
The minimum deposit is $1,000, but you can invest as little as $20 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 shares.
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.
What is blue-chip art?
Borrowing from the idea of blue-chip stocks, blue-chip art refers to artwork considered as high value and high quality compared to the broader market of investments. These qualities also imply that the investment has the potential for future growth and may retain its value through a variety of economic conditions. Examples of blue-chip art 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 fee-only 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.
|Fees||1.5% annually, plus 20% at sale|
|Investment time frame||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 registers 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 has only a three-year history and they require a three- to 10-year holding period, their track record is insufficient to capture a full user experience. As of November 2020, it has zero complaints with the BBB and only one review on Trustpilot with a score of 3.2.
Negative customer comments about Masterworks are generally complaints about high fees and long holding periods on the art.
Masterworks pros and cons
- Profit from fine works of art without directly holding or storing the art.
- Potential for long-term growth of capital that exceeds the stock market average.
- Access to prevetted fine works of art without the need for expertise in the art industry.
- High management fee and commission.
- Three- 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.
- Deposit a minimum of $1,000.
How do I contact Masterworks support?
- Phone. Call 203-518-5172 on weekdays from 9 a.m. to 6 p.m. ET.
- Email. Support@Masterworks.io
Compare managed portfolio platforms
If you’re not sure whether investing in art is the right option for you, consider alternative investing options. These platforms can help you create and manage a diverse portfolio.
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, you can explore your investing options.