The Indian art market's success has been well-documented in recent years with paintings selling for record prices. Further vindication of this interest can be seen by the setting up of The Indian Fine Art Fund by The Fine Art Fund Group of UK which also runs the Chinese Fine Art Fund, launched in 2006. The Fine Art Fund currently handles a total investment of $100 million.
The Group's head Philip Hoffman, who has worked with Christie's and KPMG, was in Delhi to launch The Indian Fine Art Fund and spoke to Archana Jahagirdar about why investing in art is always a good idea.
Outline your plans for The India Fine Art Fund.
We set up the Fine Art Group five years ago and the current fund size is $100 million and we expect this to grow to $200 million in a year.
For instance, the fund brought Frank Auerbach for a million dollars in January 2006 and we sold it for $2.6 million in 2007.
Our investors like that we have an excellent team, that we have the approval of major British banks. We will also look at lesser known artists.
What kind of Indian art will you be investing in?
Principally, we will invest in modern and contemporary Indian art and buy Indian art worldwide.
Our investors will get an opportunity once a year to see all the works in Geneva and this will include both our international as well as Indian art works.
So far, we have had 20 to 30 Indian families who have shown a strong interest in investing with the fund. The fund is a very exclusive club, we will not deal in the retail segment.
How good is the idea of art being another "alternative asset class'?
Dealers sell art for profit, artists sell art to make a living. Damien Hirst has made millions by selling and investing in art.
The art that our fund buys is lent to museums. Our investors also get to hang paintings from the fund's collections in their homes.
Most private collectors think of art as an investment. Money is vulgar and that's a fact of life. And scarce things become popular.
Apart from the obvious benefit of growing one's money, what are the other benefits of investing in a fund like yours?
We also offer co-investing deals. For instance, we bought a Peter Doig painting for $880,000 and we sold that for $2 million. Our co-investor doubled his money. We also let investors know if we are buying a piece of art, and if they too want to buy it, they can.
How viable is an art fund compared to traditional funds?
The nice thing about an art fund is that it is transparent. We are like a gold, oil or property fund. Our fund is evaluated by KPMG. The reason that we have pension funds investing in us is that we have met the criteria.
When the credit crunch has been happening in the US, the art market is booming. China, Abu Dhabi and India are building or will build their own museums. The Russians, the Arabs want art and when they start spending on art, it will put pressure on art prices.
The economist William Baumol called forecasting art prices as "floating carp game." Your comment.
He's absolutely right. The fact is that we buy art to make capital gain. Our business is not about forecasting prices but in forecasting trends. It's purely a skill and it's called listening as opposed to forecasting.
