Art Funds See 2012 Gains

International art sales realized more than $64 billion in 2012, with the art market outperforming equities.

Art collectors of ArtKabinett social network are witnessing huge gains in their independent collections.

Art fund groups are becoming a popular way of hands-off investing in art.

One London-based fine art fund, Fine Art Fund Group, has become a leading art investment house with over $150 million in assets under management.

The company also represents some leading banks in their art advisory relationship.

The group was founded in 2001 by Philip Hoffman, pictured here, to develop and manage investment vehicles that invest in fine art, and offers a rare opportunity to invest in art with the added benefits of diverse professional expertise.

Hoffman has notably stated, "The value of a Canaletto will never go down to zero. It will never do an Enron!"

Before launching The Fine Art Fund, Hoffman spent 12 years working for Christie’s, which he joined from KPMG, and at 33, he became the youngest member of the Christie’s International Management Board.

The Fine Art Fund Group has a team of 40 professionals and has representatives in London, Lugano, Latin America, Athens, and Dubai.

As well as managing the investment funds, the Group provides art advisory services to major banks in Switzerland, USA, the UAE, Greece and Luxembourg.

Hoffman is a regular speaker at the Credit Suisse Family Office Forum, the ING Art Conference and Euromoney Conferences, and frequently comments on the art market on Bloomberg TV, BBC radio, CNBC, CNN and Sky News

This group was the first fund of its type to invest in art as a worldwide asset class, and continues to be the only one to do so on this scale.

Enjoyment of the art itself is not compromised, as investors are given the opportunity to borrow works of art, and rent them.

Free Ports for Art

The growth in the art market has also led to the rise of institutions known as "free ports" which are actually Swiss bonded warehouses.

These are places where commodities, from coffee, to gold, to paintings and sculpture are stockpiled, exempt from taxes and customs duties until they are sold.

The Geneva free port is one such warehouse located on a faceless industrial estate.

From the exterior, it looks like a rather subdued warehouse in an industrial area of the city, but Inside, it houses one of the largest collection of fine art, including work by Picasso, Matisse, Warhol and Koons.

The current art boom has seen free ports as a growth area and new extensions are planned for Geneva, while due to open next year, new free ports in Luxembourg, and in Singapore, and even Beijing.

Whether or not this locked-down side to the art world is acceptable to aesthetes, it has become a reality to the general workings behind the scenes of large corporate galleries like Gagosian and Pace -- who lease large spaces in these facilities.

It only affects the upper end of the art market and acts as an alternative to the tradition of loaning works to museums for extended periods.

It also raises questions about just how safe our museums are for works worth tens of millions.

Let's hope we don't see a repeat of the Momart disaster where on the evening of 24 May 2004 fire broke out in a Momart storage warehouse in Leyton, east London. Tracey Emins bed, The Chapman's 'Hell' and 50 Patrick Herons went up in flames.

Here is the link to FIne Art Fund Group.