We spoke to Marta Areny, one of the executive board director’s at the Day Star Fund about how Day Star fit in to the art fund market.
Why did you set up the fund?
We started the fund after the financial crisis hit Europe. We were saw that we are in an era experiencing a lot of change. Society is tired of investing in intangibles and we saw a return of people wanting to invest in tangible assets such as art. There was a need for someone to offer a financial vehicle that would unite fine art with finance in a regulated manner.
Moreover, investment funds have the potential to become a one-stop art service platform for the wealth management industry. Offering a high level expertise, transparent and professional reporting, and operation within a regulatory framework.
When did you decide to set up the fund?
We have been working on the fund for three years. It is a regulated investment fund and process of obtaining the license is a complicated and long-term process. The Investment fund was launched in the market on June 2014, which is when we get the first shareholders. Currently the fund is capitalized by over $ 60 million.
How are the works in the fund stored?
The artworks are stored in a high-security installation with temperature and humidity controls. We have received proposals from very prestigious museums and fairs asking us some artworks to display on their premises.
What is the average return on a work within the fund?
Currently, we have some Modern and Contemporary Art artworks. The return for artists such as Alberto Burri is positive and have slight growth. Burri is an artist very appreciated by collectors, but his art does not have the same return as the artwork of Basquiat or Bacon. Basquiat’s paintings have increased their very high prices, this year as he has been one of the stars of international auctions and shown very good return. In 2014, Day Star Art Fund had a yield over than 20%.
What makes the Day Star Art Fund different from other funds?
Day Star Art Fund is a regulated and audited investment fund. We only invest in paintings, sketches and drawings from the 19th Century to the present day by well-known and famous artists.
An open-ended fund with a 10 year investment horizon, the lock-in period is until 31 December 2018. We have already completed a year in the market and now the fund is capitalized with over $60 million making it one of the largest art fund in terms of capitalization in the art market. In 2014, Day Star Art Fund had a yield over than 20%.
What are the funds plans for the future?
In recent years art funds and investors from emerging countries are the major players in the art market. Just look at the latest results of international auctions. More and more, wealth managers are using art to diversify customer portfolios, fine art is a safe haven asset.
Family offices consider art and collectibles to have an important role in balanced portfolio and asset diversification strategy. In the financial market, new private banks, wealth managers and insurance companies specialising in tangible assets like fine art have appeared. Art professionals see art funds like an entrance to the market for new art collectors and investors.
What are your predictions for the market?
We saw art market declines in the 1970s, 80s and 90s, but we didn’t see anything like what we are seeing at the moment.
We are optimistic. In Europe and the EEUU, it was a very good year. We saw many, new younger collectors and wealth managers looking not only for young artists but also for well-known pieces. Most of the active individuals in the market are using art for a long-term investment.
The latest auctions in New York and London, have seen artists like Picasso, Bacon and Jean Michel Basquiat achieve new world records. Moreover, art fairs like Art Basel, FIAC or Frieze have been consolidated as invaluable events in the art sector. It is unnecessary to talk about the importance of art in the emerging countries.