What is the best way to approach art investment? Private Art Investor asked Aude Lemogne and Aymeric Thuault, founders of art advisory firm Link Management, for their view.
Art cannot be compared to traditional assets such as equities, bonds or even commodities. The access to information is restricted for the layman, liquidity is often constrained, holding costs are comparatively high and even through there are techniques to analyse the market, the value of an artwork is ultimately driven by a large variety of parameters, part of those being extremely difficult to predict.
For these reasons, Aude Lemogne, founder of Luxembourg-based art advisory firm Link Management, does not view art as a pure investment tool allowing rapid profit taking, but rather as an opportunity to diversify your assets and as a store of value.
“The recurrent display of new art indices and mathematical tools can be pretty misleading as it gives the impression that an artist price evolution can be homogeneous and synthetized. These tools are dangerous as they over-simplify the reality,” she says.
“Saying that Warhol prices have increased by 30% in 2013 is absurd: a Marilyn portrait of the 60’s has experienced a totally different price evolution in comparison with one of the lesser known celebrity portraits, implying a totally different correlation profile with other asset classes. At Link Management we are currently working on a platform for wealth managers that would sort out these massive flaws.”
Lemogne’s advice to collectors is to follow your instincts and your tastes, especially in the contemporary art market where trends tend to be extremely short-lived and there is a huge turnover of artists to satisfy an ever-increasing need for new work.
“Never skip the effort of trying to know what you are dealing with,” she warns. “We all thrive through passion, but art collecting is more than pure emotions. Rigour and rationality are unescapable when dealing with value, curation, logistics, taxes, succession, intermediation and risk management.”
Lemogne and Aymeric Thuault founded Link Management in 2009 with the aim of offering unique art advisory services that integrate financial expertise and rigorous risk management. Besides advisory services, Link Management also helps financial institutions to integrate art lending services through tailor-made and strict processes to suit their internal requirements alongside international standards.
Thuault believes that art lending has the propensity to become a very hot topic in the coming years, even though the use of art as collateral remains much under-developed in Europe compared to the United-States.
“We have observed a growing interest among European collectors, who are more and more enthusiastic about the idea of leveraging their existing art collection to use it for other investment opportunities, while avoiding an outright sale,” he says.
“Art professionals such as galleries and dealers feel more inclined to use their inventories to finance their cash-flow needs and boost temporary acquisition sprees. Link arranges co-lending deals by structuring securitized loans. We are also invested in Right Capital, an asset based lender using art as collateral for galleries and dealers.”