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State of art

The soaring prices of contemporary art have led to the mushrooming of art investment funds.

By Narayan Krishnamurthy | Print Edition: November 30, 2006

For many art lovers, it’s no longer only about the bragging rights that go with hanging the right painting on the wall. It’s also about financial returns. Art is fast catching on as an alternative investment for the well-heeled.

The soaring prices of contemporary art have led to the mushrooming of art investment funds. India’s first art fund, Yatra was launched in 2005 and Osian’s Oseta started operations in June 2006. Crayon Capital Art Fund is the latest to join the bandwagon. Gaurav Karan, managing partner, Crayon Capital, says; “The value of Indian art auctioned has grown from $4.5mn in 2003 to $150mn this year.” The Rs 40-crore fund asks for a minimum contribution of Rs 10 lakh with a three-year lock-in. Crayon plans to buy works of both proven and promising artists. These will be resold at art auctions across the world.

The returns will be shared between the fund and its investors, according to pre-set conditions. “We would announce quarterly valuations, which would be similar to the NAVs that mutual funds announce,” says Amit Vadehra, the managing partner. Currently there are no laws or regulations governing the operations of art investment schemes in India.

Knowledge of the market is difficult to acquire. However, an art fund certainly offers an investor access to the necessary expertise. But investors should examine the fund’s background and the artists they track with great care.

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