Portfolio allocation to art

What is portfolio allocation to art?

Portfolio allocation to art is simply the answer to the question of how much of your assets it makes sense to hold in art. It is not about buying one painting, but about deciding how large a slice of your whole estate art will make up alongside other assets. It is a way of thinking about art as part of a wider portfolio.

How does it work?

Advisers usually mention roughly 4 to 8 per cent of assets held in art. The wealthiest collectors, so-called UHNWI (ultra high-net-worth individuals), may go as far as 30 to 50 per cent. The exact share depends on how much someone has, how well they understand the market and what their relationship to art is.

Why does it matter?

Art figures here not as speculation but as diversification and a store of value alongside shares or property. Its value often develops differently from prices on the stock exchange, so it can give a portfolio a certain balance. And unlike figures in an account, you have the work at home on the wall, giving pleasure every day.

What should you watch out for?

The percentages given are indicative guides, not a fixed rule for everyone. Art is harder to sell than shares, its value is affected by taste and fashion, and holding it involves care and insurance. It therefore pays to put into art only as much as you do not need close to hand, and to think in terms of a longer horizon.

— Anna Pulkertová, founder of Art Part Club