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Ten tips to build a timeless art portfolio
Considered an authority on art auction data analysis, Professor Michael Moses once stated: “There are several inherent beauties associated with the act of collecting art - the beauty of the object, the excitement of the hunt, the joy of meeting and talking to people, and the diversification potential of art in a portfolio.” On the other hand, celebrated art collector Charles Saatchi had famously remarked: “I never think too much about the market. I don't mind paying three or four times the market value of a work that I really want…” There’s a lesson to be learnt here: Peaks and crests form inevitable parts of any investment cycle, but a piece of exquisite art continues to hold its value and beauty.

In spite of a perceived lull in the market across all asset classes, there is every reason to include art in an investment portfolio. “You might think you can’t invest in fine art, but is very much an asset,” affirms Prof. Moses, adding that because it is non-correlated with financial markets, art constitutes an alternative asset which mitigates risk. In this context, here are some practical tips to build a quality art portfolio that exudes diversity, reflects current trends and is still timeless in terms of relevance:

1.First and foremost, decide for yourself how much you can allocate to start. With prices having reached attractive levels and with the economy set to grow faster than the western economies, now is a perfect time to get into contemporary Indian art. You may strike a few good bargains.

2.As every experienced collector and expert would reveal, the key is to start off with smaller canvases within one’s budget before gradually progressing to high value works by more established artists. It is not a wise idea to buy works just for the sake of a false sense of pride attached with bigger names.

3.An avid art lover, keen to become a genuine collector, should learn to initiate and immerse oneself in the process of spotting and buying quality works. It is vital to visit galleries, watch shows, study various art forms, media, style etc, and to analyze works by artists of different eras done in specific contexts. This will enhance one’s ability to analyze compositions, their themes and subject matter.

4.Market analysts feel that going for the middle work of a well-established artist or betting on a young artist both has own sets of intricacies. Accordingly, the risk element is determined. If you intend to buy art as an investment, it makes sense to diversify the portfolio with a good mix of established and emerging artists.

5.As the market dynamics suggests, it’s the availability of fresh or rare pieces that stokes bidding and drives up prices. Conversely, when sellers tend to hold back and buyers turn less optimistic, often second-rate and mid-range works flood the market, attracting little interest. The result is a sharp drop-off. Tracing its peaks and troughs is like experiencing a real roller-coaster that you shall learn to ride.

6.To make it meaningful, the collection must be more than the sum of its parts. It is equally important to make your process foolproof with appropriate paperwork. A crucial factor is provenance. Displaying, preserving and insuring the works of art properly is vital to retain their long-term value. This again demands expertise and special skills.

7.As more people are keen to view and buy art on the Web, auction houses are looking to leverage the power and reach of the medium. Pushing beyond the physical space, exclusive online galleries are now exposing contemporary Indian art to a wider base of buyers - slowly but surely. Many private equity investors and market players see it as a logical step in an increasingly global world of art. Utilizing the power and transparency of online auctions is a vital constituent of your art collecting process.

8.Your art investment, like most other traditional or unconventional avenues, should be preferably routed through experts. They possess the expertise and infrastructure to know the market conditions better. No good collection can be envisaged without an experienced dealer or gallerist, who will recommend you artists with quality works that should form part of your portfolio. They do the necessary research and pick up works by talented artists to invest in, according to your tastes and budget.

9.Last but not the least, enjoy the process of choosing, researching, buying and collecting art. Do so for sheer love of it! Look to acquire those works you would love holding on to and would continue to enjoy. Don’t just buy only from the point of view of how much it will appreciate in value.

10.Treat your collection as a priceless treasure for generations to come. Thus you will be able to draw the maximum fulfillment and satisfaction out of it. This will also help you derive good returns over time. Genuine love for art is the most vital ingredient in your conscious effort to become a successful and satisfied collector.

As the financial dimension of art gets institutional backing, it will capture the attention of the masses as an investment opportunity. Once the importance of art as investment seeps into the public psyche, it will set in motion the economic triggers to reaffirm our broader artistic and cultural infra-scape like never before. Popularizing regulated art funds with the general public also holds the key. Once a sustained flow of factual data and credible valuation criteria are established, the framework of institutionalizing the art asset will gather momentum, hastening the nascent art revolution of contemporary India driven by the momentum of public participation.