Global art investment firm Prime Art Capital is about to launch a Sharia-compliant art fund that strictly adheres to Islamic investment and curating principles.
“The launch date is subject to appropriate regulatory approvals that are necessary in the markets where we will offer this product,” says Prime Art Capital’s founder Sandip Mallik. “Our target markets are Middle East and south east Asia. This will perhaps be the only Sharia-compliant art fund that strictly adheres to Islamic investment and curating principles.”
The creation of the fund is a response to rising global interest in art funds as a form of investment. Mallik believes there are three reasons for the increase in interest: firstly, in new, non-traditional markets there has been a sudden surge in wealth, creating a need for alternate investment platforms.
“Art funds are usually the starting point for an art aficionado with a low risk appetite and long term arbitrage mentality,” he says.
“Second, the recent surge in auction prices and all the consequent good press has led to renewed interest in art funds, in traditional collector markets like New York, London and Paris.”
Thirdly, he says that banks and wealth managers receive hefty finder fees and commissions that significantly shore up their profitability, and constant need for capital. They are pushing more and more products like art funds to their captive high net worth client base.
However, Mallik also notes that the poor performance of many of the earliest art funds has been a barrier to investment for some people.
“The track record of other art funds have been quite dismal so there is resistance to such investments,” he says. “Having said that, the bar has been set very low so we see this as a great opportunity to outperform, and serve our clients’ investment needs better.”
He is also confident that Prime Art Capital’s fund will perform well: his team has been
simulating investments for about 12 months now, and they have beaten long term bond fund yields. Strong data analysis and research will remain at the heart of Prime Art Capital’s fund:
“Sharia-compliance is the over riding mandate to our analysts and asset manager. The rest is driven by our deep research capability, and proprietary analytics and data engine that models and forecasts based on macro & micro social behaviours (like fashion), geo-politics and individual wealth movements,” he says. “For example, our model told us to invest in contemporary Cuban art 18 months ago, well before there was any significant word about normalcy in relations with the United States.”