Buy art because you love it – not because it might make you rich

Abstract

Standard financial advice for businesses and individuals is to reduce risk by diversifying investments. One way to do this is through investing in fine art. But how does art stack up in terms of returns against the other three main asset classes - shares, bonds and property? A recent working paper uses the Citadel Art Price Index to examine whether art is a good way to diversify an investment portfolio in relation to movement of three South African indices - a share index, a house price index and a government bond index. Contrary to the popular view, the findings indicate that investing in art is the most risky of the four asset classes and produces limited returns. Buying art because you ..