Scope

According to the most recent study for the Deloitte & ArtTactic Art & Finance Report 2021, 21% of creditors said they have been interested in investing in the art using a fractional possession model, with a significantly higher 43% of creditors under the age of 35 saying the same. The surge we've seen in both the art market and the fractional art funding industry over the past 18 months is consistent with the pandemic, which seems to have been a catalyst for shifting attitudes toward artwork funding.

So, will the increase in the ownership of fractional artwork continue?

Spending money on a percentage of artworks essentially removes the emotional component of owning art, thus any normal funding can duplicate this behavior. In bull markets, there will be more buyers, whereas, in bad markets, there will probably be fewer buyers.

What does this mean for the market for fractional art financing? As long as the market for art remains as strong as it is right now, the call can be maintained. The post-pandemic artwork market rebound has driven income and costs, but the fractional ownership market has been in a honeymoon phase. Maximum fractional ownership buyers are set to gain from a market downturn, in which liquidity dries up and costs fall (yes, the price of art can fall!).

To profit from art, it is necessary to have the following qualities: expertise and knowledge, cost-cutting, spot-on timing, access to inventory (ideally at prices below market), access to customers, and the financial wherewithal to take a long-term perspective and weather any downturns. Those who were alarmed by the 2008 financial collapse and the pandemic in 2020 may have been better off waiting, as the art market demonstrated strong resilience in both instances and recovered within a 12- to 18-month timeframe. The time the paintings were stored away from the public marketplace is strongly correlated with their repeat public sale earnings, according to the current ArtTactic study analyzing artistic endeavors with repeat public sale earnings in the most recent New York marquee auctions in May. Returning on investment 50 people were saved from the public sale market between the ages of 10 and 30; 49 of them bought with an 8.8% effective annual return (now not adjusted for inflation). Five out of thirteen artistic endeavors that had been kept out of the market for less than ten years, however, showed increased performance unreliability.