The Art of Investing: Fractional art ownership as a financial instrument

Abstract

This study examines returns on fractional art compared to traditional art and other assets, and the impact of holding periods on returns. Utilizing repeat-sales data from Masterworks, we calculated holding period returns for each artwork. The metrics were standardized to identical holding periods and compared using quantitative measures and regressions. Our findings indicate that fractional art investments outperform traditional art and other assets, exhibiting an inverse relationship with inflation. Although emotional motivation remains predominant in art investing, financial considerations are increasingly significant. Masterworks' returns have an inverse relationship with holding periods. We conclude that fractional art returns demonstrate a superior risk-return profile compared to traditional art and other assets, and the holding period significantly impacts the fractional art returns.