30 August, 2022

Throughout history, people who have invested in blue-chip art are traditionally the rich and ultra-rich. However, thanks to advancements in technology and innovative business ideas, investing in blue-chips has become increasingly accessible and affordable. That said, many aren’t taking advantage of its recent accessibility, due to continued confusion around the term “blue-chip” and how artists within that category are assessed. In this article, we provide a definition for this popular art market term and explain why many investors consider this type of art to be a safer investment option. 

What is “Blue-Chip Art”?

Blue-Chip Art is usually defined as high-value artworks, which have been created by established artists with a proven track record on the art market. It usually sells for the highest prices at auction and consistently increases in value over time, making it a relatively “safe bet” for art collectors and investors (MoneyMade). 

The term “blue-chip” was borrowed from the stock market, used to refer to a stock that is in an established and profitable company. From an investor’s perspective, if an artist’s previous work has steadily increased in acclaim and profit over time, then they may be more inclined to continue buying works by them, just as they would stock from stable companies. 

How does the performance of “Blue-Chip Artists” compare to the S&P 500 index?

ArtPrice's econometrics team developed an index of the top 100 artists (Artprice 100) to help investors "quantify the art market's value accretion by focusing on its most stable elements”, comparing it to the S&P 500 index. ArtPrice's analysis showed that over the past 18 years, artworks by this group of artists, which include Pablo Picasso, Marc Chagall and Mark Rothko - to name a few -  have experienced incredible growth in value, outpacing the S&P 500 index by more than 250%.

 Artprice100 even grew by 1.8% in 2020, a period not only marked by the almost complete absence of international art fairs but also by the forced shift of galleries and auction houses to the digital realm. Still, the price of the art market's top 100 artists (based on auction turnover) has continued to rise, bringing its overall growth since 2000 to +405%.

 Additionally, according to ArtMarket.com, the Artprice 100 index in 2021 rose by 36%.

 In times of economic crisis, blue-chip art, largely regarded as a “safe haven asset”, has also proven to be more robust than the S&P 500, as we discussed in our previous article, ‘Inflation: An Art Market Ally’. 

 Who can invest in Blue-Chip Art?

 Blue-chip artworks have always been made available through big auction houses. However, thanks to the rising model of fractional ownership, where high-value artworks are split into art shares, allowing separate individuals to become co-owners of the pieces, ownership of blue-chip art is no longer reserved to the wealthiest in society. At London Trade Art, for example, art shares are purchasable for £125 each, in order to help us achieve our mission of democratising the art market. 

 Such models also allow for greater transparency, utilising NFTs and blockchain technology to link to all digital certification tied to the artwork, as is the case with LTArt, for example, and enabling co-owners to trade and track their art shares within a secondary market, much like the stock market. This gives individuals greater control over their own art investments and allows them to invest in multiple artworks at one time. 

 So, to conclude, investing in blue-chip art is available to everyone, who wishes to start building a portfolio or collection of artworks that have a more proven track record in the art market. For established investors, it can also allow them to further diversify their portfolio of investments, which is advisable by most wealth managers during times of economic instability. 

Sources:

Guy Ovadia, ‘One of a Kind: What Is Blue-Chip Art and Should You Invest in It?’, MoneyMade, July 2022, https://moneymade.io/learn/article/what-is-blue-chip-art