When you think of art auctions, you might think of bejeweled ladies and bespoke gents at Sotheby’s… silently bidding on priceless Picassos to hang on their gilded mansion walls.
After all, historically, multimillion-dollar artwork has only been available to the highest level of social elites—a sign of prosperity and refinement.
But one company is disrupting this trillion-dollar asset class… and bringing priceless works of art to the average investor…
Masterworks is focused exclusively on securitizing “blue-chip art”—works created by masters whose art typically sells for tens of millions at auctions.
Blue-chip art is a massive, global market worth over $1.5 trillion (according to accounting/consulting giant Deloitte)… with around $60 billion exchanging hands each year.
Securitizing (also referred to as tokenizing) an asset simply refers to dividing its value into separate, smaller assets so multiple investors can own a fractional share.
And you can securitize just about anything, from luxury real estate… to barrels of whiskey… and even businesses… You’ve undoubtedly heard of our Curzio Equity Owners (CEO) security token, which allows investors to own an equity stake in Curzio Research. (Investors will likely be able to trade the CEO token on tZERO starting this December.)
By securitizing blue-chip art, companies like Masterworks are opening a new door to this previously exclusive asset class… giving regular folks a chance to own a stake in some of the most valuable artwork in the world.
Here’s how it works:
Masterworks does extensive due diligence. It has an entire team dedicated to buying the best pieces of art at attractive prices… while analyzing historical and potential returns on investments. Less than 3% of artwork researched passes Masterworks’ diligence process.
Once a piece of art is purchased, the company files all necessary forms with the Securities & Exchange Commission (SEC)… posts the artwork on its site… and allows investors to “request an invite” to buy fractional ownership in the artwork. (Note that Masterworks sells partial ownership of physical art, not to be confused with NFTs, or digital collectibles.)
Buyers and sellers can also buy and sell fractional ownership directly through Masterworks’ secondary market, which is a trading platform for individuals to buy/sell the paintings.
(For example, as I write this, one investor has made a fractional bid of $1,775 to invest in Andy Warhol’s Electric Chair.)
Masterworks aims to hold each painting for 3–10 years while it appreciates in value… and then sell it for a gain. For its part, it charges a 1.5% annual management fee, and receives 20% of profits upon sale of the painting.
The company has invested over $200 million in art… with a new art piece offered to investors every 10+ days at prices ranging from $1–30 million.
This is a great example of how securitization can disrupt markets… and create massive opportunities for both businesses and investors.
To learn more about Masterworks and the process behind fractional ownership, listen to Frank’s interview with founder and CEO Scott Lynn on Wall Street Unplugged.
Editor’s note: Contemporary artworks appreciate 14% a year on average (vs. the S&P’s 9.5%)… and Deloitte estimates the fine art market will grow by another $1 trillion over the next five years.
Masterworks is the ONLY company giving investors access to this billionaire-preferred asset class…
And for a limited time, they’re giving Curzio readers the opportunity to skip the waitlist. Go here to join the action.