Alternative investments are all the assets that sit outside the traditional trio of shares, bonds and cash. They include property, private equity (stakes in companies not traded on a stock exchange), commodities such as gold, and collectibles too: wine, watches, classic cars and art. Art holds a special place among them. It is sometimes called an emotional investment, because we often choose things we have a personal relationship with.
The main reason investors hold alternative investments is diversification (spreading risk across different kinds of assets). The value of art often moves independently of the stock market. In Edutéka I put it simply: when shares fall, the painting on the wall knows nothing about it. You cannot buy a work with a single click like a share, though. Most deals take place at auction houses, in galleries and privately, so you will not read the market price off a daily quote.
The advantage is the spreading of risk and, with art, its tangibility, since the value of a work does not depend on how a single company is run. The price for that is three particular features: art pays no dividend (unless you lend the work out for a fee), a sale can take longer, and valuation is difficult because comparable data are scarce. Add the costs of insurance, storage and auction fees. Nor does the alternative market only go up. The luxury investment index of the consultancy Knight Frank, which tracks art, wine and watches among other things, ended 2025 down 0.4%, and that after two years of decline. What follows from this? Alternative investments spread risk; they do not remove it.
They suit people who already hold the core of their wealth in traditional assets and can leave money to rest for a longer time. With art, count on a horizon of five years or more, and more like ten with contemporary art. How large a share of your wealth to put into art is covered in the entry Portfolio allocation to art, and how quickly a work can be sold in the entry Liquidity. Start with a smaller sum and, above all, by getting to know the market: follow auctions, exhibitions and the artists who speak to you. And does a whole work feel like too big a first step? Then there is fractional ownership, where you hold a share in a work.
— Anna Pulkertová, founder of Art Part Club
Related terms: Portfolio allocation to art · Liquidity · Emotional value vs investment · Investment horizon · Fractional ownership
