All works of art, like everything, change over time. The essential question for investors is the rate at which the art will deteriorate.
A new innovation, the Art Preservation Index (APIx), seeks to address precisely that issue. It is a rating system similar to investment ratings from Moody’s and Standard & Poor’s for the financial industry, but with the goal of quantifying stability-related investment risks for fine art.
The system was developed by art preservation specialist Emily MacDonald-Korth and her father, investment specialist James Korth, who runs JW Korth & Company – a provider of institutional investing expertise to individual investors, registered investment advisors and small institutions.
“Investors looking to secure a multi-generational asset need to know that the asset will last that long; the APIx evaluates fine art stability and communicates that information to the art market,” says MacDonald-Korth.
She points out that while some works of art will last for hundreds of years with minimal change, some will last less than a decade.
“Investors deserve to know this type of information. In terms of decreasing in value, sometimes art becomes so severely degraded or damaged that art insurance companies total out the artwork – like a car that has been in an accident – stating the cost of conservation is more than the art object is worth.
“I have first-hand experience with works that are so badly deteriorated that the cost of restoration would be prohibitively enormous for a private collector – only a museum that has a staff of conservators can take on such a project. “
Prior to the invention of the APIx there was no standardized method to assess fine art stability risk for investors. Conservators and conservation scientists have developed many analytical techniques to evaluate certain aspects of ageing such as fading of pigments, the way changes in climate effect art materials, chemical analysis techniques to identify degraded paints, and others but an integrated system like the Art Preservation Index has no comparison.
The ratings for each artwork are derived from a multitude of factors such as materials used to make the piece; how those materials are applied, how they interact individually and with one another both chemically and physically; the size, date, and condition of the artwork; and known conservation and preservation concerns for similar works. The rating terms are based on a grading scale similar to those of Moody’s and Standard & Poor’s.
“In creating the APIx I drew on my inherent understanding of art, and ability to transfer that knowledge into a patent-pending system of stability evaluation is the result of a lifetime of experience,” says MacDonald-Korth, who has over 15 years of experience working in art conservation and research, fine art and collections consulting, and historic paint analysis.
She has published, lectured, and taught in these areas internationally and has worked on conservation and technical analysis projects across the United States, in China, and in Italy.
“The stimulus for the APIx invention was my constant interaction with art that is deteriorating. My profession as a conservator means I work on art that has already deteriorated or has been damaged such that it needs treatment by a conservator.
“I was consistently frustrated knowing that much of the deterioration I remediated was caused by insufficient material usage. I go to contemporary art galleries and, unfortunately, I see a lot of work that will not last – and most has a hefty price tag. Knowledge about the stability of art materials exists; it just didn’t have a way to get to the public. With my business partner, my father who is also an investment banker, we came up with the system out of need for better information for investors.”
Anyone interested in requesting a rating can contact the APIx via ArtStability.com, but MacDonald-Korth is at pains to point out that APIx ratings are not recommendations about buying or selling works of art.
“We are not involved in monetary valuation or appraisal; APIx ratings are research-based expert opinions about stability or longevity of artworks. If a piece of art receives a low rating it does not mean the art has low monetary value, a low rating indicates there are considerable concerns regarding stability and longevity.”
In many cases storage and preservation strategies will help the longevity of the artwork. Preservation needs are taken into account during the rating process, and a complicated projected preservation program is reflected in the stability rating.
“Each stability rating report will include details about the artwork, the stability rating, and rating rationale – and additional features such as preservation and conservation recommendations, high-resolution photo documentation, and scientific analysis will be available,” she says.
An APIx-rated work means that an artwork has been assessed for projected longevity – something that is not currently examined before works are sold. APIx stability ratings create a new model for trading art as an asset because they incorporate stability and risk awareness.
“For the first time, investors will be informed about the longevity of their investments, empowering them to make better decisions. I would like to see all blue-chip works of art rated by the APIx. APIx stability ratings are valuable to the seller, buyer, insurer, and future conservators. The information in each APIx stability rating is a window into the future of every art investment.”
MacDonald Korth’s biggest tip for successful art investment is to be informed. Artwork stability varies hugely – so it is advisable to choose wisely. She recommends buying work that has trusted information about the materials used to make it, its current condition, and conservation history.
“If it is unclear whether the information about materials and condition are accurate, call an art conservator or APIx agent (all APIx agents are professionally-trained art conservators). Recent research also shows that works by the most famous artists hold their value over time. So, if you can afford it, buy from a top artist. But remember, many works by top artists have serious stability issues.”