Is Art a Good Investment?
- By
- November 25, 2025
- CBR - Economics
The online investment platform Yieldstreet makes this pitch: “A great way to appreciate art is to invest in it.” With $10,000, it says, you can buy into a pool of art that has produced upward of a 12 percent net annualized return.
It points to Artmarket’s Artprice100 Index, which is one of a handful of benchmark indexes for the art world. Some are put out by Artnet, which bills itself as the leading online resource for the international art market. Artnet began offering art-focused analytics in 1989 and now offers indexes based on self-reported data from more than 1,800 auction houses and 340,000 artists. A different set of art-focused indexes, inspired by the S&P Cotality Case-Shiller Home Price Indices, was created in 2002 by Mei Jianping of Cheung Kong Graduate School of Business and the now-retired Michael Moses, both then at New York University, using public-auction sales data from 1875 to 2000. Mei and Moses sold their indexes to Sotheby’s in 2016.
In 2023, Mei launched a Chinese-focused set of art indexes that he developed with Moses and Jiang Guolin, now retired from the Shanghai Academy of Social Sciences. And this past year, CKGSB and SDA Bocconi jointly launched the MM Art Indices, based on auction records since 1873, to track global performance.
Mei and Moses wrote in 2002 that “contrary to some earlier studies, we find art has been a more glamorous investment than some fixed-income securities, though it underperforms stocks.”
The past few years have produced some of the worst 10-year returns on art in seven decades—but Mei sees that as a buying opportunity. “We’re seeing a rare alignment of market conditions that suggest art may be undervalued on a historical basis,” he says. “For long-term collectors, this could represent a strategic entry point into the market.”
NYU’s Amy Whitaker and City St. George’s, University of London’s Roman Kräussl calculate that had the artists Jasper Johns and the late Robert Rauschenberg retained 10 percent equity in their early pieces, sold between 1958 and 1963, those investments would have vastly outperformed the US equity market, returning 20–40 percent every year from 1958 through 2005.
A potential buying opportunity
Art returns have fallen over the past decade and have even turned negative—in sharp contrast to the S&P 500 and historic norms.
Chicago Booth’s Canice Prendergast is circumspect about art investments, particularly when it comes to vehicles that pitch owning art in fractional form. “Art investment funds have been a total failure for the most part,” he says. He points as an example to the Artist Pension Trust, set up in 2004 to serve as a retirement fund for artists. It reportedly was worth $500 million, the combined value of more than 13,000 pieces of art from more than 2,000 artists—before the fund publicly fell apart in 2017.
One reason it’s tough to make such a fund work is that profits likely come from a small fraction of artworks, he explains, estimating that roughly 10 percent will appreciate while 90 percent will lose their value. Also, the art market isn’t liquid, and it can be hard to sell a money-losing investment. In these respects, investing in contemporary art is more like investing in early-stage companies—but consider that venture capitalists and angel investors don’t have to pay significant storage costs that eat away at returns.
Fractional ownership has also been hard to implement on a practical level, whether it’s for investors in a fund or for artists who want to retain some ownership of their output. Private royalty agreements exist but can be logistically difficult to manage and hard to enforce when art sells privately. Whitaker has written extensively on using the blockchain and smart contracts to register and track shares of art for artists who retain partial ownership of their work. A few companies have tried to implement it, including Bitmark, to which Whitaker was an advisor—but the idea hasn’t taken hold.
Artnet News’s editor-in-chief, Naomi Rea, suggests in a June article that the art world might want to rethink the narrative of art as an investment. She describes how a bust by Alberto Giacometti failed to sell at auction with a price tag of $70 million even though others of his works have sold for far more.
“Perhaps now is the moment to tell a different story: That art pays other kinds of dividends,” she writes. “Maybe value isn’t just what the next buyer will pay, but what the work gives you while you live with it.”
- Mei Jianping and Michael Moses, “Art as an Investment and the Underperformance of Masterpieces,” American Economic Review, December 2002.
- Amy Whitaker and Roman Kräussl, “Blockchain, Fractional Ownership, and the Future of Creative Work,” Management Science, July 2020.
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