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The current state of the economy has dealt some heavy hits to the everyday investor.
As of November, the inflation rate in Canada rose to 6.8 per cent, led by rising costs of food, housing and still high price of gas and other goods. In response, the stock market has been rocky, but that doesn’t mean you should stop investing — you might just want to branch out.
This is where alternative investments come in. Alternative investments — assets other than stocks — can help hedge against inflation, protect your wealth from downside risk and potentially enhance portfolio returns.
Thanks to one disruptive start-up, an alternative investment has finally been made accessible to everyday investors — fine art.
You probably think of art as just some canvas that makes your living room look better, or something you’d see hanging at the National Gallery of Canada but art has quietly outperformed other asset classes for years.
Art is part of a $2.3 trillion asset class according to Deloitte, which is roughly half the size of venture and private equity. Contemporary art has outperformed the S&P 500 by 131 per cent for the past 26 years, and it has a near zero correlation to stocks according to Citi.
Having a low correlation to stocks makes art a useful hedge against market volatility. Masterworks, a platform with more than a $1 billion unicorn valuation, is revolutionizing art investing and bringing this asset class to everyday investors.
Becoming an art investor
Masterworks makes it possible for investors to access an asset that has previously been limited to the ultra-wealthy. Instead of buying a single Monet or Banksy, you can now invest in shares of individual works.
With this investment platform, all you have to do is select which shares you want to buy and Masterworks will handle the rest.
They do the work for you, finding, purchasing and storing the artwork, while you get the rewards.
Masterworks holds the piece until it appreciates in value. When they sell it, you get a prorated portion of the profit. It may take some time — Masterworks will sell the piece in 3-10 years — but they have a track record of 9-39 per cent net annualized returns on sold paintings. If you don’t feel like waiting for that windfall, you have the option to sell your shares on their secondary market.
Still unsure? Take a cue from Forbes: “If you’re looking to diversify your portfolio without spending a fortune, Masterworks offers a compelling option.”
It only takes seconds to apply for Masterworks — they make it simple to invest in art and potentially rake in those colourful returns.
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