| INVESTMENT: You don't even have to like art to make money from it; a reality check on how art funds work.
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| It took 30 days for the Osian’s art fund to amass Rs 102 crore in subscription monies. Neville Tulli, chairman-founder of Osian’s, laughs that it took no time for it to be spent either.
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| As prices in the frothy Rs 1,000-crore art market have soared in public view, it’s hardly surprising 82 per cent of the subscribers were first time art investors.
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| The fund is riding on a wave of fascination and expectation. Delhi Art Gallery proprietor Ashish Anand says, “Prices for the top 10-15 artists have gone up 700-1,000 per cent over the last five years.”
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| Tuli stops just short of guaranteeing a 35-40 per cent return, and indicates that their “non-speculative” portfolio only consists of (112) time-honoured artists. It’s interesting to note the absence of the best selling brand for Indian art — Tyeb Mehta — from Osian’s list of 10 dearest purchases that mostly represents Progressives and Bengal school heavyweights.
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| Is that a sign that certain artists have peaked? There is certainly a discernible concern about a possible plateauing fuelled by a stock glut.
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| Vickram Sethi, director of The Arts Trust Gallery, indicates increasing knowledge of reputed suppliers cornering stock and manipulating prices. The watershed will come when, starting September, the fall of the gavel at eight or nine auctions, including Christie’s, Sotheby’s and Saffronart, will indicate respite or renewal.
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| Anand doesn’t think an offloading of art in two or three years (which is when Osian’s art fund will mature) has the capacity to crash the market.
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| “Foreign (non NRI) interest in Indian art is growing, so the demand base is widening beyond our borders.” Sethi agrees, “The base of buyers in the last five to seven years has expanded 400-500 per cent.”
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| Osian’s isn’t the only art fund to have begun trading. The Yatra fund, launched by Edelweiss Securities and managed by Geetha Mehra of Mumbai’s Sakshi Gallery, closed subscription last September. It’s a close-ended four-year fund that required a minimum investment of Rs 25 lakh and is decidedly more tight-lipped about its operational stratagem than Osian’s.
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| Kotak too has an art fund, though sources say it functions more like an advisory; and there’s certainly a move to push more funds into the market by interested parties.
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| All this is fairly remarkable, given that globally there are but a handful. There’s little public confirmation yet as to the performance of any Western funds although the general estimate points to an average 15 per cent returns.
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| That’s how much Geetha Mehra estimates Yatra’s returns, displaying considerably less ambition than Tuli. In truth, there can be no guarantees because there’s always been a great deal of subjectivity in art transactions. And returns will depend on the price of purchase.
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| “Today if you have money you have bargaining power,” says Anand. “Funds run by financial institutions rarely work, and are often capped before they even begin.” Tuli claims Osian’s aim is to “create the highest levels of transparency in its updates to investors”.
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| Still, there are art buyers who will not be tempted into investing in a fund because they believe it takes a cold hard view to something incredibly personal.
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| “Art funds are for people who know nothing about buying art themselves. What’s the point if beautiful art is going to lie in a vault somewhere?” derides an art collector.
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| Art funds are decidedly for high-net-worth individuals looking for the next alternative investment strategy.
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| Tuli says. “Art funds will go a long way towards making art a mainstream asset class.’’ And if some of the resulting regulation could spill over into the rest of the supply side of art, that wouldn’t be a bad thing either. |
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