Fractional investment refers to the practice of dividing the ownership of an asset, such as artwork, into smaller shares that can be purchased by multiple investors for significantly lower sums of money, often just a few dollars or pounds or euros. Through online platforms and specialised marketplaces, art enthusiasts can now own a portion of valuable artworks, eliminating the need for large capital outlays typically associated with art acquisition.
Historically, art ownership has been reserved for wealthy collectors or the obsessed art lover. Fractional investment disrupts this traditional model by opening up art ownership to a wider audience. With lower investment thresholds, individuals can now participate in the art market and access prestigious artworks that were once beyond their reach. This democratisation of art ownership fosters inclusivity and diversifies the pool of art investors.
Fractional investment platforms offer investors the flexibility to buy and sell shares in artworks, providing increased liquidity in the art market. Previously, art ownership was often considered illiquid, as it required finding a buyer willing to purchase the entire artwork. Fractional investment introduces a secondary market for partial shares, allowing investors to exit their positions more easily and potentially benefit from price appreciation.
The growth of fractional investment has led to an expansion of the art market. Artworks that were previously held by private collectors or locked away in museums are now being made accessible through fractional ownership platforms. This increased liquidity and market participation can stimulate demand and raise the value of certain artworks. Furthermore, artists and galleries can leverage fractional investment to attract a wider range of investors and increase exposure for their works.
By owning shares in multiple artworks, investors can spread their art-related investments across various artists, styles, and periods. This diversification helps reduce the impact of individual artwork price fluctuations and market volatility, potentially stabilising returns and making art a more attractive asset class for investment purposes. But what about art for the sake of art??
While fractional investment brings numerous advantages, it also poses challenges and considerations. Authenticating and valuing artworks in a fractional ownership context can be complex, requiring transparency and expertise. Additionally, ensuring fair governance and decision-making processes among multiple shareholders becomes crucial to avoid conflicts.
Andipa have been working several of the world's largest art fractional investment firms in Europe, America and Asia. For further information please contact us on firstname.lastname@example.org