Premier Art Finance Artemundi Group / 2019 Premier Art Finance Artemundi Group : 201 | Page 15

New Yo rk · Lo n d o n · Mexico C ity · Ma drid
APPRECIATION STRATEGIES .
GEOGRAPHIC ARBITRAGE.
CASE STUDY.
The art market enjoys multiple jurisdictions resulting from The use of Freeports has become a quintessential element of
globalized access for both sellers and buyers. Tax arbitrage our low-expense strategy. Strategically selected locations allow
and cross exchange rate discrepancies allow us to increase our us to benefit from currency fluctuations.
investor’s return.
CONSERVATION/ RESTORATION.
CASE STUDY.
The inevitable decay caused by the effects of time and handling Artemundi used restoration to increase the value of a XIX
decreases a work’s value. Nevertheless, a poor conservation Century landscape by Velasco, which was on offer under its
state may offer negotiation discount leverage offering the fair market value due to its poor conservation condition. After
opportunity for a professional restoration based value-add a simple cleaning and relining, the piece was sold in only 58
strategy. days, producing a 23% return on investment.
ECONOMIES OF SCALE.
CASE STUDY.
Artemundi’s investment fund structure offers the efficiency During AGF, the average cost of maintaining, storing and
of economies of scale to manage large portfolios without a insuring $1 million USD of art investments for a period
significant increase in the administrative expenses or affecting of one year was estimated at $1,857 USD and remained
the fund’s performance. directly related to the inventory size. However, management
and administrative expenses remained close to constant at
0.80% of AUM, considerably lower than most alternative asset
investment funds.
ARTEMUNDI’S STRATEGIES OF MANAGING ART INVESTMENT RISKS .
ART MARKET IMPERFECTIONS
Limited offer
Black market
ARTEMUNDI COUNTER MEASURES
Acquirement capacity
Due Diligence, examination protocol
Lack of liquidity Stability
Barriers to entry 30+ years of experience
Imperfect indexes
Total knowledge overall markets
Asymmetric information Accuracy in valuations
Artworks are indivisible Securitilization
Principal-agent problem
Oligopoly of the auction houses
Market based on trust relationships
Process of acquiring artworks is slow
Price determination in primary markets
Market is not robust in every price sector
Arm’s length transactions
Private closings: discretion, efficiency, velocity
Arm’s length and transparency
Wire Fast-turn over (10 days avg.)
Stay away from primary markets
Identify and monitor robust sectors
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