Friday, October 4, 2013

Art fund industry in the doldrums

The troubled art fund industry is still in the doldrums says The Art Newspaper. Further closures, a slow fundraising environment and lower-than-expected returns are compounding the effects of the credit crunch, which had already claimed several victims.

Of the 36 funds that Noah Horowitz, now director of The Armory Show, lists in the apendix to his 2011 book Art of the Deal, ten had closed by the time his book was published and a fruther seven have since been abandoned.

Managers of funds that have survided say they have learned from their mistakes. Philip Hoffman who runs Fine Art Fund Group, ostensibly the most successful art investment group, says that he has to realisitic about the net returns of his first fund (launched in 2004), which is expected to be around 6%, despite gross returns of nearly 19%. He says that administrative costs and currency fluctuations had a bigger impact than expected and that "my mistake was investing long term in old masters, which have done nothing." Read more...