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State of the art – The investor

JACK BROWN – Senior Art Broker, Art Futures Group (AFG)

Jack Brown was exposed to art from an early age. His mother was a high school art teacher, while his grandmother, Mary Fogg, a painter and potter, was a founding member of the renowned Welsh Art Group. Brown has over five years’ experience trading and investing in art. He tells why art is not as subjective as you might think and about his best investment.

What made you decide to become an art broker?

I saw a great deal of instability in the art profession: despite my grandmother’s work being posthumously displayed on the BBC website and held in public collections, she – like many other talented artists – did not receive the financial recognition you might expect. I love working with art as a financial tool. The market is growing – I can show investors good returns whilst also satisfying my creative gene – I’m surrounded by fantastic art daily.

What does AFG do?

We provide a brokerage service which includes tracking and research to identify the artists whom we consider to have the best investment potential. We import the artwork and arrange independent valuations, insurance, options to lease the art and exit strategies.

Does AFG specialise in a type of art?

Our primary focus is Chinese contemporary art, as this has been the fastest growing market for the last decade or so. There are more midcareer artists moving up to the blue chip level in the Chinese contemporary market than in the European market, indicating that in many cases Chinese artists are undervalued in relation to their foreign counterparts.

Isn’t art subjective?

Traditionally that was seen to be the case, but the market has made great strides in the use of data and tracking to provide indicators for art investment. At AFG we look closely at numbers behind the artwork and artist, even before taking into account the execution or “quality” of the piece being analysed. For example, the longevity of the artist’s career and the output of paintings, amongst others.

Does death boost exclusivity and rarity value?

Death of the artist means no more production. There are many examples of artists only being recognised posthumously, but you don’t have to be dead to be successful. At the top end of Chinese contemporary art is Zheng Fanzhi,

“You don’t have to be dead to be successful.”

whose work sells at over USD$20 million. British contemporary names like Damien Hirst or Jeff Koons are also well into the millions of dollars, and all of the above are still alive and producing art.

What is the market like in Hong Kong?

The Hong Kong market is amongst the best in the world. It is the art hub of Asia. The reasons are simple: proximity to China, zero taxes and royalties payable when trading art, and fantastic competition amongst auction houses, galleries and brokerages.

Does the art come first or second for your clients?

Most of our clients are investors. For them, it’s about building a collection and diversifying into different artists as opposed to picking what will look good in their living room. The people we have made the most money for are those who can put personal taste aside and buy based on financial logic. We do try to match personal taste with what makes sense to invest in, but it is secondary to showing investors a profit.

Why do you think more people are in investing in art?

In my experience, investors are disheartened with the instability of other assets. There is also evidence to suggest that growth in the art market has outperformed indexes like the FTSE 100. Within the alternative asset classes, art is by far the best performing except for classic cars – but to invest in cars you need garages and spare parts (possibly from the 70’s!) which eats up profits.

How do you deal with faddish tastes in the art world?

Bubbles in the market don’t really affect us as they tend to involve up and coming artists. An artist must have proven longevity before we will look at them. This is a safer way to invest and much less speculative.

Do you yourself invest in art?

Yes I do – most of the brokers here do. The best performing piece in mine was a Liu Li Guo on which I made a 34 percent return over two years. There are some pieces of art I bought in Indonesia because I liked them. I doubt they will ever be worth anything but they are for enjoyment rather than investment.

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