The following is a sponsored post in partnership with Masterworks. Please read Masterworks’ disclaimer.
There are many ways to invest, and one platform that stands out is Masterworks.
Masterworks is the first art-investment platform that lets investors buy shares in high-value artworks created by renowned artists, including names like Andy Warhol.
Yes—you can invest in fine art and paintings through Masterworks. It’s an unconventional option that may appeal to investors seeking diversification.
Masterworks has been covered by major outlets, including:
- CNN: “How art ‘shares’ could make you a Warhol collector for just $20”
- Forbes: “The New Art Economy: How Would You Like To Own A Warhol?”
- Techweek: “Invest in Claude Monet with Masterworks’ Art Stock Exchange”
If you’re looking to broaden your portfolio beyond stocks and bonds, Masterworks is worth examining.
Most individual investors concentrate their portfolios in public markets and, occasionally, real estate. Yet Deloitte’s 2017 Art and Finance report found that 88% of wealth managers recommend including art and collectibles in investment portfolios. Fine art has also historically outperformed the S&P 500 over long periods, which is why collectors and institutions have used art as an alternative asset class for generations.
I don’t currently hold art in my own portfolio, but I recognize the value of diversification and I’m researching additional options outside my existing investments with Vanguard. Masterworks makes high-end art more accessible to everyday investors by fractionalizing ownership in works that have shown appreciation over time.
For example, The Wall Street Journal reported on returns in alternative assets, noting that certain art indexes outperformed the S&P 500 during specific periods, underscoring how art can play a different role in a diversified allocation.
How investing with Masterworks works
The Masterworks platform is straightforward. The process generally follows these steps:
- Masterworks acquires multi-million-dollar paintings. Each year the firm evaluates hundreds of works and selects pieces by blue-chip artists for acquisition.
- After purchasing a work, Masterworks registers it as a qualified securities offering with the U.S. Securities and Exchange Commission (SEC).
- Investors can then buy shares on the Masterworks website, with typical minimum investments starting around $1,000.
Masterworks charges fees to cover the costs of managing and maintaining the artworks. There is an annual management fee of 1% to cover storage, insurance, gallery fees, and other expenses. In addition, Masterworks takes a 20% performance fee on profits, payable only when a painting is sold for a gain.
There are two primary ways investors can realize returns:
- If a collector offers to buy a painting, shareholders vote on whether to accept the offer. If the sale is approved, proceeds are distributed to shareholders pro rata.
- Masterworks also seeks to create secondary-market liquidity by facilitating trading relationships through broker-dealers, enabling sales of shares within its platform network when available.
In short, Masterworks provides a regulated, fractional way to invest in high-value art that historically has been accessible only to wealthy private collectors or institutions. The relatively low minimum makes it an approachable option for investors who want exposure to art as an alternative asset class.
As with any investment, consider the risks: art markets can be illiquid, valuations are subjective, holding periods may be long, and past performance is not predictive of future results. Fees and the structure of the offering can also affect net returns.
If you’re exploring diversification beyond traditional stocks and bonds, Masterworks may be an interesting addition to research further and compare with other alternative investments.
Do you have a diversified portfolio? Why or why not?