Fine art and high finance : expert advice on the economics of ownership

338 Pages·2010·2.31 MB·English

by  McAndrew

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Fine Art and
High Finance
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Fine Art and
High Finance
Expert Advice on the Economics
of Ownership
Edited by Clare McAndrew

Bloomberg Press

New York

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© 2010 by Clare McAndrew. All rights reserved. Protected under the Berne Convention.
Printed in Canada. No part of this book may be reproduced, stored in a retrieval system, or
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First edition published 2010
1 3 5 7 9 10 8 6 4 2
Library of Congress Cataloging-in-Publication Data
Fine art and high finance : expert advice on the economics of ownership / edited by Clare
McAndrew. – 1st ed.
p. cm.
Includes bibliographical references and index.
Summary: “Art investors and collectors can’t protect and profit from their collections without
grappling with a range of complex financial issues like risk, insurance, restoration, and conserva­
tion. In Fine Art and High Finance, Clare McAndrew and a highly qualified team of contributors
explain the most difficult financial matters facing art investors”–Provided by publisher.
ISBN 978-1-57660-333-8 (alk. paper)
1. Art as an investment. I. McAndrew, Clare.
N8600.F56 2010
332.63–dc22 2009047843
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This book is dedicated to my son, Kane, whose wonderful

and timely arrival spurred on its completion.

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Contents

About the Editor ix
Acknowledgments x
About the Contributors xi
1 An Introduction to Art and Finance 1
Dr. Clare McAndrew
2 Art Appraisals, Prices, and Valuations 31
Elizabeth von Habsburg and Rachel Goodman,

Gurr Johns; and Dr. Clare McAndrew

❏ How, where, and when people buy art and what they do with it
❏ The economics of the art market: supply, demand, and price

determination

❏ Valuation and appraisal issues; art as a fi nancial asset;

quantitative and qualitative issues

3 Art Price Indices 63
Dr. Roman Kräussl
❏ Investment returns to art; assessment of performance between

assets and over time

❏ Art price indices—methods and debates
❏ Art data
4 Art Risk 87
Dr. Clare McAndrew and Dr. Rachel Campbell
❏ Investment risk
❏ Portfolio diversifi cation
❏ Risk management
❏ Credit default swaps
❏ Derivatives and structured products
5 Art Banking 117
Suzanne Gyorgy, Citi; and Dr. Clare McAndrew
❏ Art as collateral and downside risk
❏ Art lending: history and current practices
❏ Art financing solutions: comparative review of banks, auction houses,
galleries, and others
❏ The future of art banking
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Contents vii
6 Art Funds 135
Jeremy Eckstein, Randall Willette, and
Dr. Clare McAndrew
❏ Art funds: history and motivations
❏ Art funds today: different methods and approaches
❏ Strategies: sector allocation, opportunity funds, and hedg funds
❏ Current status of the market
❏ Future outlook
7 The Government and the Art Trade 161
Dr. Clare McAndrew; Rena Neville,
Sotheby’s NY; Anthony Browne, BAMF
❏ Role of the government in the art market
❏ Art and the national patrimony
❏ Trade restrictions and investment issues
❏ U.S. relationship between art and government
❏ U.K. relationship between art and government
8 Insurance and the Art Market 197
Christiane Fischer and Jill Arnold, AXA
❏ Art as a real asset: risk issues and the insurance market
❏ Insurance and the art market: history, practice, and methods
❏ Art appraisal and valuation issues
9 Art and Taxation in the United States 211
Ralph E. Lerner, Withers
❏ Tax and the art market: global investment and the tax nexus
❏ Income tax implications
❏ Transferring wealth: capital gains and inheritance tax
❏ Wealth taxes
❏ VAT and trading taxes
❏ Estate planning and the legal implications of inheriting, selling,
and bequeathing art; divorce situations; prenuptial agreements;
division among heirs
10 Art and Taxation in the United Kingdom
and Beyond 249
Pierre Valentin, Philip Munro, and Samantha Morgan,
Withers
❏ The UK tax system
❏ Direct taxes: income tax, capital gains tax and corporate tax
❏ Indirect taxes: VAT
❏ Wealth tax
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viii Contents
11 Art Conservation and Restoration 263
Barbara A. Ramsay and John K. Jacobs, Artex
❏ Conservation versus restoration versus preservation
❏ Cost and return implications
❏ Methods, practices, and services
12 The Illegal Art Trade 287
Charles T. Danziger and Thomas C. Danziger
❏ The black and grey markets for works of art
❏ Provenance, fakes, and forgeries
❏ Illegal import and export, repatriation, export licensing,

and the national patrimony

❏ Art theft and stolen art: issues and anecdotes
❏ The global movement of works of art: legal and illegal, repatriation,
art and confl ict
Index 309
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