🖼️Economics of art investments

Historical performance of art over time :

Art vs. S&P 500 : Contemporary art has significantly outperformed the S&P over the past 25 years.

Value-Weighted Art Index Performance vs. S&P 500 (Total Return) Indices Since 1995 (Based on repeat-sales from 1995 to 2020)(1)

Art vs. other conventioanl assets : Contemporary art prices appreciated annually at 14.1%, on average, from 1995 – 2021 1H, versus a 9.9% annual return from the S&P 500.

Annual growth of contempapry art vs. conventioanal assets (Total Return) Indices Since 1995 (Based on repeat-sales from 1995 to 2020) (*)

Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other.

The art market is not highly correlated with the stock market or bond market. This is exactly what investors should be looking for when diversifying their assets.

Growth and low correlation during inflationary periods : Real assets, notably Contemporary art, have benefitted from falling real interest rates and help provide protection in an inflationary environment. Of the major asset classes available to investors, art can mitigate risk because it shares a very low long-term correlation coefficient to the S&P 500 Index.

Contemporary Art Prices vs. Real Interest Rates (*)

Source details

(1) Internal Masterworks analysis. Yahoo Finance. Index shown through 2020. Index data updated as of December 31st, 2020. Notes: There are significant differences between the asset classes presented. For additional information, see Important Disclosures.S&P 500 Total Return (3) 9.5% annualized return

• Repeat-Sale Pair Index of Post-War and Contemporary Art (as defined by the applicable auction house) using Standard & Poor’s CoreLogic Case-Shiller Home Price Indices Methodology.

• The Standard & Poor’s CoreLogic Case-Shiller Home Price Indices Methodology results in a value-weighted index. Auction results realized in a currency other that U.S. dollars have been converted using exchange rates provided byFRED (St. Louis Federal Reserve) at the time of the most recent sale. This adjustment is made to account for long-term exchange rate trends that would otherwise distort artworks’ performance.

• S&P 500 Total Return Index as of December 31st, 2020.

(*) Reflects value-weighted price appreciation for all Contemporary Art (i.e. work produced after 1945) that sold at least twice at public auction using S&P’s CoreLogic Case Shiller Home Price methodology. Foreign currency sales converted using a fixed exchange rate. Past price appreciation may not predict future trends. There are significant differences between art investments and investments in other asset classes. NYU Stern Data Base and Yahoo Finance for S&P 500 data; MSCI All World Index for Global Equities; FRED London Bullion Market for Gold and Fred Case Shiller for US Housing. Indices shown through 6/30/2021. Index data updated as of 6/30/2021.