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New index and fund track post-war art: AMR Post-War Art 50

Castlestone plans 18-month buying spree while prices remain low

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A new art index was launched in August to track prices of post-war art in the ongoing campaign to prove that art can be a practical asset class for investment. The AMR Post-War Art 50 Index is a collaboration between Art Market Research, creator of the AMR Art 100 Index, and Collection of Modern Art, an art investment fund inaugurated this summer.

Robin Duthy, managing director of AMR, said the index will focus on 50 key artists whose important work was done from 1950 to 1980. The artists range from Picasso and Pollock via Warhol and Lichtenstein to Polke and Kippenberger.

“The index does not cover the more speculative contemporary market,” Duthy said. “Though by no means immune to market fluctuations, the 50 selected artists enjoy firmly established reputations. Furthermore, the large number of sales of their work in the world’s leading auction houses provides an attractive degree of liquidity. We hope the new index will bring further transparency to this sector and prove useful to investors.”

Collection of Modern Art was launched by Castlestone Management, a fund manager founded in 1996 by an Australian former banker, Angus Murray, with offices in London and New York. The fund’s management committee includes Murray, Duthy, portfolio manager Leon Diamond, and former Sotheby’s staffer Constanze Kubern.

Castlestone established its reputation by investing heavily in gold bullion shortly before gold prices surged earlier in the current decade. Murray believes art is comparable to gold as an irreplaceable, unleveraged real asset, and that real assets perform well at times when central banks are printing money.

“Whenever the value of money falls, as it is doing now, the value of real assets rises, whether it’s art or any commodity such as gold,” he said, adding that money supply is currently rising at 40% a year.

Collection of Modern Art claims to be the first “retail” art fund, targeting ordinary investors with a minimum stake of £10,000 or $10,000 rather than the super-rich, although investments will only be received from professional financial advisors. The fund plans to buy two works by each of the 50 artists on the AMR Post-War index, believing this will spread its risk as evenly as possible. It currently has $25m under management, and the fund is scheduled to operate for eight years.

Kubern, Collection of Modern Art’s senior art advisor, said 3%-4% of funds would be retained as cash to enable rapid buying. She added that post-war art was chosen in preference to old master or impressionist works because museum-quality work in this field is cheaper and easier to sell. “We could buy one old master for several million, or for the same money, ten pieces from different post-war artists.”

The fund aims to buy as many works as possible in the next 18 months or so, when art prices are expected to remain depressed. In this summer’s auction sales, it bought Picasso’s 1969 wax crayon drawing Adolescents, Aigle et Âne for £265,000 at Sotheby’s and Andy Warhol’s Five Guns, 1983, for £210,000 at Phillips de Pury.

Castlestone, whose London headquarters are next door to the Saatchi Gallery in Chelsea, intends to loan works from Collection of Modern Art for display in museums whenever possible, both to provide visibility to the collection and to improve the provenance—and therefore the value—of the work.

Originally appeared in The Art Newspaper as 'New index and fund track post-war art'

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