Art ain’t all alternative and alpha

Fin24 has a story outlining how the South African art market has been struggling. Seems that art, like many other alternative investments, has rather more Beta or systematic risk buried inside the arty exterior and isn’t as good a diversifier as claimed.

update 7 April 2009

The FT is also running a story showing art prices plunging in the first quarter.

The Mei Moses index, set for release on Tuesday, shows art prices fell 35 per cent in the first quarter, having held up during earlier months of the financial crisis.

The worst year on record for art investors was 1991, when prices dropped 41 per cent, said Mr Moses, who has collected data going back to the 1800s.

The index providers added that the art market tended to track the state of the economy but with a time lag.

None of this says that art can’t be a good investment, but the systematic risk involved is still high.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.