The broad strokes of adding variety to an investment portfolio through art

TORONTO — David Heffel says he likes art as part of an investment portfolio because it provides daily dividends.

“They’re assets that you can live with and enjoy on a day to day basis, but more importantly you can share them with family and friends.”

Heffel, president of the Heffel Fine Art Auction House, has seen his share of paintings bought for a pittance sell for hundreds of thousands or even millions that prove to be fantastic returns on investments.

But while returns are far from reliable, investment advisors say it can be a creative way to add a bit of diversity to an investment portfolio.

“I think it’s a great idea,” said Michael Taglieri, who studied art history and worked in the art world before transitioning to become senior wealth advisor at Assante Capital Management Ltd.

“It’s another way to diversify a portfolio, which is important, and it’s a good way to support culture.”

The sentiment is part of a wider trend among wealth advisors who see art as part of growing passion-based investments.

Deloitte’s Art and Finance report said 88 per cent of wealth managers polled said they think art and collectibles should be part of wealth management offerings and about half say diversification is one of the strongest reasons to include art in wealth management.

The 2017 report showed the market can provide steady returns, citing Artnet indices that showed the global contemporary art market had a compound annual growth rate of 8.54 per cent over the previous 15 years.

Investors shouldn’t, however, bank on such returns, as even some high-end art segments have shown negative returns in recent years, while average investors generally don’t have access to the higher-end art tracked in the indices.

Taglieri’s advice to potential buyers is to look for young or emerging artists because the costs of entry are generally much lower.

“If you’re going to an auction and buying from the secondary market of an established artist, your investment is a bit safer, a bit more solid, but you’re going to pay for it.”

People looking to devote a small portion of a portfolio to dabbling in art should look around at many galleries, magazines and auctions to find what style they like, and make sure they love what they’re buying since it’s quite a speculative purchase, said Taglieri.

“You really have to enjoy a piece, because it may take a long time to appreciate.”

Heffel said that while the costs of entry are higher, he prefers to stick with more mid-career artists because the vocation is just so challenging that many artists drop out before being able to establish themselves and add value to earlier works.

“I like to focus on mid-career painters that have some track record of some museum recognition, a public collection inclusion, and if you’ve had an opportunity to meet those artists, that they have a lifelong dedication.”

To improve the chances of making a sound art investment, Heffel recommends exploring online databases of private auction sales and other online tools to understand the art market itself and which kind of art holds or increases in value.

Buyers should also factor in insurance costs and make sure the paperwork is in order so the provenance of a piece can be proven, he said.

For investors who would rather avoid the process of identifying, buying and storing high-end art, there are art funds where investors pool capital and buy pieces that would otherwise be out of reach.

However, they don’t come cheap. Art funds are generally only accessible to high net-worth individuals, and can have opaque structures and sometimes onerous terms, making them a fairly niche product.

The funds also run counter to the advice of collectors like Heffel who recommends buyers explore the creative world of fine art and carefully buy according to your taste, and budget.

“In the early stages look at as much art as you can…standing face to face in front of as many art works as you can to educate your aesthetic eye.”

Ian Bickis, The Canadian Press

Just Posted

Builders say it’s not the time for higher permit fees in Red Deer

Construction industry is hard hit by slow economy

Bighorn Country telephone town hall for Red Deer area set for Wednesday

Residents can phone in from 6:30-7:30 p.m. to hear about the project or ask questions

YouTube revises policy, bans dangerous prank videos

SAN BRUNO, Calif. — YouTube is trying to prevent otherwise bright people… Continue reading

May’s govt faces no-confidence vote after huge Brexit defeat

LONDON — British Prime Minister Theresa May faced a no-confidence vote Wednesday,… Continue reading

Olds-area school buses cancelled this morning

Red Deer Catholic buses will resume this afternoon

WATCH:2019 Canada Winter Games torchbearers announced

Sixteen torchbearers announced with others to be revealed during Opening Ceremonies

Hertl’s hat trick leads Sharks past Penguins 5-2

SAN JOSE, Calif. — Tomas Hertl needed just three games to get… Continue reading

Starring role beckons for Canada’s Alphonso Davies at Bayern Munich

BERLIN — Canadian teenager Alphonso Davies could be thrown in at the… Continue reading

Bus singer gives voice to Venezuela’s growing diaspora

LIMA, Peru — A year ago, Venezuelan migrant Reymar Perdomo was singing… Continue reading

Corey Hart to be inducted into Canadian Music Hall of Fame at Juno Awards

TORONTO — Crooner Corey Hart will join Canadian music royalty in the… Continue reading

Lucic, Kassian each score twice to power Oilers in 7-2 win over Sabres

EDMONTON — Milan Lucic and Zack Kassian each scored a pair of… Continue reading

Big Valley family gives back to community

Donates $24,560 to Stettler Health Foundation and Edmonton Stollery Children’s Hospital

Giordano notches three points to lead Flames in 7-1 blowout of Coyotes

CALGARY — Flames captain Mark Giordano celebrated his 800th NHL game in… Continue reading

All-female team out to prove women racers aren’t a gimmick

DAYTONA BEACH, Fla. — Every racing series in the world is full… Continue reading

Most Read