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Donnalynn Patakos, Editor-in-Chief of Portray, interviewed Alan Snyder, Founder and CEO of aShareX, about how you can!
aShareX stands as a cutting-edge auction exchange committed to democratizing ownership of high-value assets. It achieves this by enabling fractional ownership and trading of various assets such as artworks, collectibles, gems, automobiles, and more. Functioning as the driving force behind fractional auctions for auction houses, galleries, and private collectors, aShareX is dedicated to broadening access to the fine art and luxury market. By providing art enthusiasts and investors with easy entry, reduced ownership costs, and control over liquidity, aShareX opens up new possibilities in the world of art investment.
The concept of fractional ownership in the art world has created an extraordinary opportunity for prospective investors to engage in a market historically reserved for the elite. aShareX, an innovative online platform, is leading this transformation by allowing individuals to purchase shares in fine art and collectibles, making these exclusive asset classes accessible to a broader audience.
Alan Snyder shared, “It is a full-on trading system. Let’s let the marketplace decide the value. Fractional bidders compete against other fractional bidders and 100% bidders to get an accurate market-based price. And it works! We held our first auction last November.
Through our research we discovered that people who bid in major auctions are uncomfortable. They cannot test drive how to participate in an auction, but they can practice here. We give them that ability. You can signup and bid in a simulated auction to test it out, and every time you do it, the results are different, making you more confident and ready to invest confidently.”
He further explains, “You can bid as a 100% owner or choose fractional ownership. Let’s say the fractional bidders win; they receive an SEC-qualified security to prove ownership—common stock. aShareX will also create a secondary market to provide liquidity for those shares.
We connected to fourteen service providers to make our system work. We run KYC and anti-money laundering checks, employ two broker-dealers, and have an independent cash custodian, and we provide comfort.”
aShareX is a digital auction platform that facilitates both fractional and full ownership of artworks and collectibles. The platform’s mission is to democratize fine art and collectibles ownership, enabling a diverse range of investors to participate. Individuals, businesses, trusts, pension funds, foundations, and endowments can partake in aShareX auctions. There are no minimum wealth or income requirements to invest.
How It Works: Fractional Ownership
aShareX introduces a novel approach to art investing through fractional ownership. Participants can bid for fractional or 100% ownership of artworks in live auctions. Fractional bidders can bid up to the valuation of their choice, with bids aggregated in real-time until they meet the auctioneer’s asking price. Winning fractional bidders receive registered securities through an SEC-qualified offering, representing their ownership interests. The insured, maintained, and stored assets are secured in a professional facility.
The platform’s philosophy revolves around solving the flaws of traditional alternative assets, emphasizing true market pricing and investor control over exits. With aShareX, individuals no longer need millions to own a Picasso, a 40-carat orange diamond, an exotic car, or a Mickey Mantle rookie card.
aShareX highlights the advantages of investing in alternative assets, emphasizing portfolio diversification, low correlation to equities and bonds, and the durable value of these assets.
Current alternative structures leave much to be desired. Most structures give little control to the investor, and many of the fees are dramatic and significantly lower your return. Snyder adds, “About three years ago, we decided there has to be a better way.”
aShareX’s distinctiveness lies in allowing buyers to acquire shares in high-value artworks in an auction that would otherwise be financially out of reach. The number of shares a fractional bidder receives corresponds to their winning fractional bid amount as a percentage of the total artwork sale price.
For those seeking full ownership, aShareX’s process aligns with traditional art auctions. After winning an auction, full bidders gain outright physical ownership of the artwork, only paying traditional auction fees.
When an artwork is fractionalized, winning fractional bidders receive shares representing their interests in a Delaware LLC. The artwork is insured and stored in a secure facility or museum.
AS- Another hat I wear is a lender against museum quality pieces; we will be delighted to take the art and put it in exhibitions, promotions, and increase visibility to the artist. We have done it, and we expect to do it here.
DP- What are the Benefits of Using aShareX?
AS- “If money managers buy a Picasso, they mark it up for the investor by 11%, charge 1.5% management fees per year that they hold the art, and also take 20% of the profit.
We auction the art and charge a one-time 6% fee to the fractional winners. There are no annual fees. The one-time fee pays for the storage, insurance, annual audits and appraisals.
Teaming up with auction house partners, aShareX conducts lending-grade due diligence on all artworks. This includes estimated values, condition reports, provenance, exhibition and publication histories, and a catalogue raisonné.
Investors can monitor the performance of their portfolio through annual assessments of the fractionalized artworks. Moreover, the decision to sell such artworks lies with the shareholders. A vote is automatically called and initiated during the 6th and 7th years of ownership. If not sold previously, the art will be sold in the 8th year. Additionally, shareholders can decide whether they would like an early vote, if there is a compelling offer on the table.
Notably, aShareX held their first auction in conjunction with Bonhams and aims to collaborate with auction houses again for future auctions.
aShareX will host a secondary market where sellers list shares for sale, offering fractional investors potential liquidity. Fractional bidders from around the world can participate in aShareX auctions.
Snyder remarks, “Selling shares on the secondary market has a tax advantage. Collectibles have a capital gains tax rate of 28%. However, if I sell my shares, they can be subject to a more favorable tax rate of 20%. The secondary market will be run through the aShareX website..”
What caught my attention is the inheritance scenario where, for instance, two of three heirs want to sell. If one wishes to retain ownership, they have the option to place the inherited item up for auction. This way, the two heirs opting to sell can receive the proceeds, and the third heir choosing to keep it would retain a percentage, becoming one of the fractional owners. This arrangement ensures that the investment remains actively traded, offering a unique solution in situations of shared ownership.
In conclusion, aShareX emerges as a platform that breaks down barriers in fine art and collectible investing. By embracing fractional ownership, competitive pricing, and providing comprehensive information to prospective investors, aShareX creates an accessible and transparent method for engaging in high-value investments.
aShareX is joining forces with Inversion Art to promote and sell captivating works of art directly from the studios of select artists. This unique event allows art enthusiasts to immerse themselves in the creative world and participate in the auction action. Through aShareX’s platform, you can vie to become a fractional owner or secure full ownership of these remarkable artworks. To explore the diverse array of artists and their creations, you can view the lot to join the collective ownership experience and become a fraction of the faction!
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Podcast on Apple, Spotify, Google and the Infobeans website
In this episode, we sit down with Alan Snyder, Managing General Partner at Shinnecock Partners and the founder and CEO of aShareX, an alternative investment auction platform.
From pioneering the Discover Card to founding an investment boutique, Alan shares invaluable insights into fractionalization in finance and introduces aShareX, an innovative auction exchange platform. We explore the revolutionary concept of fractional bidding for high-end assets and learn more about Alan’s investor-centric approach.
Join us as we discover the challenges and solutions in fractionalizing high-value assets, along with the importance of compounding returns in investment.
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One of the biggest ways that the investment landscape has evolved in recent years is through fractional ownership of expensive assets like art, high-end real-estate, and other cherished collectables once only available to the ultra-wealthy.
Now, companies like aShareX and Arrived are leading a revolution with a concept called fractional ownership for alternative investments. This innovative approach is making it possible for just about anyone to invest in alternative investments. That was once out of reach for most people.
Simply put, fractional ownership means you don't have to buy a whole asset to invest in it. Instead, you can own a part of it, like owning apiece of a pie, and not the entire pie. This method is not entirely new — it's been used in various forms, such as shared vacation homes, fractional stockownership, mutual funds, just to name a few. Now, thanks to technology, it's becoming more popular and accessible, especially in alternative investments like art.
The essence of fractional ownership is teamwork and economies of scale. Investors pool their resources to collectively own a part of an asset. This process is usually organized through companies that set up a legal structure to hold the asset. Some companies, like aShareX, use auctions to sell shares of the asset, allowing people to bid on either a fraction or the whole item. This process expands investors’ options, brings a missing cohort of bidders to auctions, and allows investors to own a share of an expensive painting or a piece of real estate without buying it outright.
Historically, investing in high-value items was exclusive to the ultra-rich and big institutions. This left most people on the sidelines, unable to participate in these potentially profitable and non-correlated opportunities. High upfront costs and the complex nature of managing these investments were significant hurdles. But the rise of fractional ownership is changing this, making it easier and more affordable to diversify investment portfolios with alternative assets.
Based on information provided by aShareX, since 2017, as an industry, over $1 billion of art and collectible assets have been securitized. This includes some well known artists such as Basquiat, Banksy, Monet and Warhol. At least a few hundred million of real estate assets have been securitized. Arrived, on their website, says that $128M of property value is owned by investors.
Fractional ownership platforms like aShareX and Arrived have opened the door to investments in art and more.
Arrived focuses primarily on real estate. With as little as$100, investors can buy shares in single-family homes or vacation rentals. Arrived takes care of all the management, offering a hassle-free way to invest in real estate. Backed by big names and with hundreds of properties funded, Arrived is making real estate investment accessible for everyone. The company is backed by some well-known investors including, but not limited to, the Salesforce CRM +0.2%.com founder Marc Benioff, through Time Ventures, the Zillow GroupZ -0.7% former CEO Spencer Rascoff, and the Uber UBER +1.1% CEO Dara Khosrowshahi. Here’s an example where someone can only invest $129,000 and get fractional ownership in a stunning Lake Superior house.
aShareX and Arrived solve the flaws of traditional alternative asset structures. Both companies anticipate allowing investors to trade their shares in a secondary market improving their assets’ liquidity profile. aShareX goes even further by giving investors an entry point at the assets true market-based price and offering investors control over exits. “It is past time to empower investors,” Alan Snyder, the CEO and founder of aShareX said. “They are putting up the cash and paying all the costs; they should have the control over their investments.”
Investing through fractional ownership comes with several benefits. It allows for diversification, non-correlated returns, and spreading out various risks across different assets. It also provides access to markets like art and real estate, which often move independently from the stock market, potentially offering balanced returns even when other, more traditional, investments are down. Plus, it's flexible, giving investors the chance to be part of something bigger without the full responsibility of ownership.
Arrived is changing the game in real estate investing. By lowering the entry point, it's inviting more people to invest in property markets across the U.S. With a growing portfolio and a focus on investor returns, Arrived is a prime example of how fractional ownership is evolving, offering new ways to invest and grow wealth.
The rise of fractional ownership signals a new era for investors, where access and opportunity are more widely available than ever before. As platforms like aShareX and Arrived continue to innovate, the promise of inclusive, diversified, and accessible investing becomes a reality. This revolution is not just about opening doors to high-end investments; it's about leveling the playing field, offering everyone a chance to invest in ways that were once unimaginable for the masses.
Disclosure: In the past I have done consulting work foraShareX.com. I do not have a financial interest in the company or any company mentioned herein. No investment advice is being given. Everything is for general informational and educational purposes, only. Past performance is not indicative of future returns. No earnings claims are being made. Results are not typical. Investing involves risk.
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Adam Sarhan hosts aShareX founder Alan Snyder on the Smart Money Circle podcast
Watch the interview here
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The financial world is experiencing remarkable changes, with access to more high-value investment opportunities than ever before. This access is partly thanks to the relatively new concept of fractional ownership. There are many new entrants that offer fractional ownership across various asset classes and one of them that jumped out at me is aShareX. aShareX is an innovative platform that allows investors to own a fraction of precious art and other alternative assets though auctions. By embracing the concept of fractional ownership i n auctions, aShareX is reshaping how we think about asset allocation, asset acquisition, risk management, while allowing a wider audience to participate in investments that were out of reach for many people.
The Rise of Fractional Ownership: Breaking Down Barriers
Fractional ownership represents a significant leap from the conventional all-or-nothing approach to investing in assets. This model enables individuals to purchase a part of an asset, thus lowering the entry barrier to investing in high-value assets. The concept isn't entirely new—it's been around in various forms, such as real estate co-ops or timeshares. However, with the advent of technology and platforms like aShareX, fractional ownership is gaining momentum, offering a viable route for people to invest in assets ranging from fine art to vintage automobiles.
How Fractional Ownership Works: Simplifying Invests
The essence of fractional ownership lies in collective asset ownership, where investors buy shares or stakes in a single asset. This approach is made possible through structured legal entities, ensuring that all investors have a stake in the ownership and potential profits of the asset.
Auctioning plays a central role in this model. aShareX, for instance, hosts auctions that allow for both fractional and outright purchase bids, catering to a diverse investor base. Post-auction, investors receive shares proportional to their bids, granting them a slice of the asset's future financial gains.
Tackling Investment Exclusivity: Making Assets Accessible
Traditionally, investment in high-value assets was an exclusive affair, often reserved for the wealthy or institutional investors. This exclusivity posed a significant barrier for average investors, limiting their opportunities for portfolio diversification and access to alternative asset classes. aShareX addresses these challenges head-on, utilizing fractional ownership to democratize investment, making it feasible for a broader audience to venture into high-value asset classes.
The Advantages of Fractional Ownership: Broadening Horizons
Adopting fractional ownership comes with a lot of benefits for investors. It allows for risk dispersion across various assets, reducing the impact of market volatility. Additionally, it opens up opportunities to invest in asset classes like art and luxury goods, which can provide substantial returns with lower market correlation.
Another notable advantage is the shared responsibility among investors. This collective approach mitigates individual risks and management duties, making it easier and more appealing for individuals to expand their investment portfolios.
Conclusion: Democratizing Wealth Creation
This movement is just getting started. It will be very interesting to see what happens as more and more people participate in auctions and use platforms like aShareX. I like this concept because it allows more people to participate in investment opportunities that were previously beyond their reach and it allows investors access to high-value assets. It also provides a more inclusive investment environment. This shift likely marks a significant step forward in democratizing wealth creation, offering a promising path for investors from all walks of life.
Learn more here: https://www.asharex.com/
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This Art & Finance Report is a barometer for emerging trends and sentiment in the art and finance industry and highlights developments in the art market.
The 2023 edition of the biennial Art & Finance Report arrives during economic, environmental and geopolitical uncertainty. Being able to adapt and innovate under these circumstances is more important than ever, and the search for purpose and asset diversification is even more acute.
As with previous editions, our goal is to highlight the continued evolution of the art and finance industry during both good and difficult periods, opening our readers’ eyes to possible pathways that can benefit all stakeholders across the art, culture and finance ecosystem.
The Deloitte Private Art & Finance initiative encourages collaboration between stakeholders at the intersection of art business, culture and finance. We believe that, by providing more transparency and awareness around motivations, obstacles, needs and drivers in the art and finance industry, we can catalyze and improve dialogue, inspire new models and solutions, and amplify the role and importance of culture in improving our lives and society.
The 2023 G20 summit in India reassessed the economic significance and societal value of the cultural and creative sectors to support inclusive growth, decent work, and Sustainable Development Goals (SDGs). Wealth managers dealing with art and collectible assets have an opportunity to strategically engage with art and cultural heritage assets and in new conversations with clients about leveraging their art and cultural wealth to achieve both financial and societal value.
Since the Art & Finance initiative was established in 2008 and the first report published in 2011, the industry has changed immensely. In 2022, ultra-high net worth individuals’ (UHNWIs’) wealth associated with art and collectibles is estimated at US$2.174 trillion. This year’s report predicts that this figure could grow to an estimated US$2.861 trillion in 2026, due to the increased number of UHNWIs across the world and their increased allocation of wealth to art and collectibles. As luxury assets become part of the art and finance landscape, a larger portion of wealth will be managed by the sector. Approximately 63% of surveyed wealth managers have already integrated art into their wealth management offering.
We want to thank the experts for their invaluable contributions and survey participants and art market stakeholders (wealth managers, collectors and art professionals) that continue to share their views and opinions with us. In this edition, 55 leading experts shared insights through 31 articles and interviews (13 from 9 different Deloitte offices) and 435 art and finance stakeholders (ranging from art professionals, family offices, wealth managers, to collectors and representing locales across the world) were surveyed.
In 2023, we take a 12-year retrospective look at our findings. Despite continued challenges in transparency, regulations and business practice modernization, the industry continues to innovate and evolve. It is well-positioned to reap the benefits of the coming global wealth transfer and a finance industry increasingly oriented to holistic wealth management.
We hope this report will give you a richer understanding of the complex nature of the art and finance ecosystem, the key change agents and the role you can play in shaping its future.
The 2021 edition of the Art & Finance report arrived at an uncertain and tumultuous time, amid COVID-19, climate change and other global challenges. The question is, what role can art and culture play in tackling many of these challenges? On 2021, the G20 Ministers of Culture agreed for the first time on a G20 Declaration on Culture, which firmly positions culture as an engine for sustainable socioeconomic impact.
In its modest way, the Deloitte Art & Finance initiative aims to be part of this change and transformation. Uniquely positioned at the intersection between art business, culture and finance, its goal is to elevate the dialogue between stakeholders; encourage new models around finance and sustainable investment in art and culture; and amplify the role and importance of culture in improving our lives and society. This seventh edition of the report, in collaboration with ArtTactic, demonstrates how our understanding of the art and finance ecosystem has greatly evolved.
Please Note: As communicated in a media statement in 2022, we draw your attention to the fact that Deloitte has separated its practice in Russia and Belarus from the global network of member firms and will no longer operate in these countries.
Since launching the initiative in 2011, we have seen the global art market ebb and flow: from the aftermath of the financial crisis to the peak of the market in 2016. In parallel, we have also monitored how the wealth management sector is increasingly responding to competitive pressures in its own industry, and the role art and collectible wealth are playing in the transition to a more holistic wealth management model.
Since our 2017 report, external factors, such as increasing political and economic uncertainty, rapid technological progress, climate change, and social inequality have dominated the daily headlines. We live in a changing world, fraught with uncertainty. This is the context in which we should view the global art and finance industry—the crucial intersection between culture and wealth.
We hope that this report will help to raise awareness of emerging developments and initiatives within the art and finance industry. Transparency, regulation, and technology trends will play an important role in the future of the art and finance industry. However, collaboration between all stakeholders (art professionals, young and old collectors, and wealth managers) is essential if we are to address the pressing issues and challenges we face, particularly increasing trust in the art market today and in years to come.
It has been exciting to follow and monitor how the Art & Finance industry has evolved over the last six years. In this edition, we have compared the findings and developments from the previous four editions.
Increasing competition in the wealth management industry has put emphasis on a more holistic wealth management model, which has become a key driver and motivation for incorporating art-related wealth into the service offering.
A lot has happened since we launched the inaugural issue in 2011. One major change has been a shift in the primary focus on art investment toward issues around the management of art-related wealth, including art-secured lending, estate planning, art advisory, and risk management. This year, we are encouraged to see both a confirmation of the increasing convergence between collectors, art professionals, and wealth managers on the role of art in a wealth management service offering, as well as a convergence of stakeholder initiatives to improve art market transparency and infrastructure around the management of art and collectible wealth. Many of these tools and services are mentioned in this report.
The 2016 Art & Finance report comes at a challenging time for both the art market and the wealth management industry. With the art market growth showing signs of slowing toward the end of 2015 and in early 2016, combined with slower economic growth, increasing volatility in the financial markets, and geopolitical uncertainty, the picture is becoming more complex and unpredictable.
Based on the findings of this report, the wealth management industry is clearly taking a more strategic view on art as an asset class and how it might be used as a tool to build stronger and deeper relationships with clients, in an increasingly competitive marketplace.
Since the first report, we observed significant shifts in perceptions of the role of art in finance, as well as the role of finance in art. What emerges from the 2013 report is a gradual convergence in the motivation and interests of key stakeholders in the art market and wealth management community as regards art as an asset class, and this trend is driven by the client.
This first report was focused on establishing a better understanding of the boundaries of the emerging Art & Finance industry, the concerns and motivations of its stakeholders and the potential of art as an asset class among the wealth management community.
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Your humble narrator, a self-proclaimed donut connoisseur, would posit that the magic of a jelly donut begins and ends with the indulgent sweet center. While one cannot ignore the exterior architecture that provides a jelly donut’s supporting structure, there exists a world of goodness in the middle that expands the horizons of one’s enjoyment if one simply looks for it. To maximize the jelly donut experience, one must focus on the sweet center and ensure that each decadent bite contains the optimal ratio of the jelly that’s hidden in the middle to the golden delicious exterior that is readily apparent when holding this coveted treat in one’s hands. This keen emphasis on the jelly in the middle can be similarly applied when effectuating expansions of many asset markets, where the often-overlooked middle market can potentially offer the sweetest benefits.
Allow me to apply the jelly donut analogy when considering the art market. Annual art sales have held relatively steady in recent years, to the tune of approximately $68billion in annual turnover1. A recent survey by Art Basel and UBS of 2,800 high-net-worth individuals found that, for the first half of 2023, only 9% of these wealthy respondents reported they were considering purchasing artworks valued above $1 million, down from 12% in 2021, indicating a “rapidly thinning high-end” on the heels of a strong surge in sales following the COVID-19 pandemic2. With the global art market so heavily reliant upon a relatively small group of ultra-wealthy buyers – who generated $2.1billion in sales valued above $1 million in the first half of 2023 alone3– the natural question becomes: how can art ownership become more accessible to a broader audience, thereby expanding the overall category? How can we turn up the heat on this proverbial oven, so to speak?
The answer is as follows: rather than focusing on the readily apparent ultra-wealthy outer crust of the donut that has for so long comprised the art market’s structural scaffolding, we instead need to dig deeper and tap into the sweet jelly center in order to enhance market participation.
In years past, the art market’s approach to democratizing ownership via lower-cost offerings has primarily revolved around print sales, and this holds true today. From 2008 to 2023, Phillips’ annual turnover in its worldwide “Editions” auctions increased by 827%; in 2023 alone, the department achieved sales of $40 million, up almost 20% over 20224.
Luxury brands have similarly attempted to expand their addressable markets by introducing mid-market sub-brands that offer “affordable luxury” to consumers. A few examples of this approach are Armani’s “Armani Exchange,” Tiffany & Company’s “Return to Tiffany,” Ralph Lauren’s “Polo Ralph Lauren,” and Starwood’s “Aloft” hotels. According to Kelly Meng Parnwell, lecturer in luxury brand management at Goldsmiths College, University of London, “Consumers buy low-priced products with luxury logos, not for the aesthetic value of the product, but for the social value that luxury brands can provide them.”
And yet, most of us want to have our cake – or in this case our jelly donut – and eat it too, preferring an iPhone Pro to an SE model. Similarly, prints do not offer a viable solution for those collectors and investors who want to own an original artwork but lack the financial wherewithal to purchase the piece outright.
With artworks below $50,000 comprising 90% of art lots at auction, and 45% being below $5,0001, there exists demonstrable demand for mid-market art buyers. Further, the most active segment amongst collectors is for works priced between $10,000 and $50,000, which has grown from 17% in 2021 to 25% in 20232. Such enthusiastic market participation at these more accessible price points bolsters the argument made by many financial experts when they proclaim fractional ownership to be the future of finance.
By fractionalizing ownership of high-value assets, of which fine art is but one example, companies like aShareX can increase meaningful market participation by collectors and investors who want their bite-sized share of the category’s historical upside (to the tune of 8.5% annual returns from 1950 through 20215), seek to diversify their portfolios with alternative assets that offer low correlations to stocks and bonds6, or simply love a particular artist and want to own one of their works for emotionally-driven or social currency reasons. This same dynamic can be applied to a number of asset types, including but certainly not limited to: diamonds and precious gems ($340 billion in annual sales7), collectible cars (outperformed the S&P 500 with 280% returns from 2008 to 20218), or sports cards and memorabilia (projected to grow 500% by 20329).
By taking an innovative approach that focuses on the heretofore untapped goodness in the middle of the jelly donut as a mechanism for expanding addressable markets, fractional investment platforms like aShareX enable mid-market investors and collectors, who would otherwise be priced out of market participation, to invest with affordable amounts and in ways that work for their individual portfolios.
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LOS ANGELES--(BUSINESS WIRE)--aShareX, Inc. (Art Share Exchange), the first and only auction-based universal trading platform dedicated to democratizing ownership of high-value alternative assets, today named Professor Eric Budish to its Board of Advisors. Budish is the Paul G. McDermott Professor of Economics and Entrepreneurship at the University of Chicago Booth School of Business. As a leading researcher in the academic field of market design, Budish is best known for his market design inventions for financial exchanges and matching markets.
“Eric’s research supports aShareX’s guiding principle that auctions are the reliable way to establish true market pricing for high-value assets like museum-quality fine art”
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"With all due respect to NFTs and blockchain trust, I’d much rather own a legally registered share of a real Picasso," said Professor Budish. “I also think it’s exciting that aShareX lets sellers of art access demand from a new class of buyers, using a creative auction design.”
Budish is a Research Associate at the National Bureau of Economic Research. He also serves as the Co-Director of The Kent A. Clark Center for Global Markets at Chicago Booth and the Krane Distinguished Visiting Professor at the University of Chicago Law School. He has published influential research on market design theory, event ticket markets, blockchains and cryptocurrencies, and patents and innovation. Budish's work proposing frequent batch auctions as an alternative to continuous trading on financial exchanges received the AQR Insight Award and the Leo Melamed Award. His ideas have influenced policy discussions at the highest levels, including major policy addresses by the New York Attorney General and the SEC Chair. Moreover, Budish's research has shaped exchange design proposals in both stock and futures markets, addressing concerns related to high-frequency trading.
“Eric’s research supports aShareX’s guiding principle that auctions are the reliable way to establish true market pricing for high-value assets like museum-quality fine art,” said Alan Snyder, founder and CEO of aShareX. ”His research and analyses are invaluable to establishing aShareX as the standard bearer, critical to building trust, ensuring investor control and enhancing competition between fractional and 100% bidders.”
Budish holds a Ph.D. in Business Economics from Harvard University, an MPhil in Economics from Oxford (Nuffield College) and a BA in Economics and Philosophy from Amherst College. Before pursuing his graduate studies, Budish was an analyst at Goldman Sachs.
About aShareX
aShareX, Inc. (Art Share Exchange) is the first and only low-cost marketplace for buying and selling fractional shares of high-value assets that features market pricing and investor control, with an initial focus on democratizing ownership of blue-chip fine art. The patent-pending auction system allows, for the first time, fractional bidders to compete against one another and against 100% bidders in an integrated back office and secondary trading platform. aShareX benefits from an experienced and dedicated team with a proven track record of building innovative companies and products, including seven years’ experience lending against museum-quality physical fine art.
Legal Disclaimer
This press release shall not constitute an offer to sell, the solicitation of an offer to buy, or a solicitation of interest in any contemplated offering of securities, nor shall there be any offer or sale of securities in any state or jurisdiction in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. None of the information in this press release should be construed as a recommendation or as investment, financial, tax or legal advice.
aShareX has not yet qualified with the SEC for any offers or sales of fractional shares, and there is no guarantee that any such offer will be qualified. Any offering of securities will be made only by means of a duly qualified offering circular, which can be obtained by qualified investors through our platform. Information about our offerings must be read in conjunction with such offering circular in order to understand fully all of the implications and risks of the offering of securities to which it relates.
This press release contains forward-looking statements, which include, but are not limited to, statements concerning the Company and its plans and projections, whether express or implied. You should not rely upon forward-looking statements as predictions of future events. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, as more fully described in an offering circular. In light of such risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Past performance is no guarantee of future results.
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The emergence of the concept of fractional ownership in the art world has bestowed a remarkable opportunity upon budding investors, allowing them to partake in a market that was previously known for its steep barriers to entry.
In a recent conversation with Ryan Johnston, the Chief Marketing Officer at aShareX, he shared some insights into the platform's unique approach to art investing. aShareX is an online platform that aims to democratize fine art ownership by allowing people to purchase shares in works of fine art. It offers both fractional ownership and full ownership, providing opportunities for a broader range of investors to access the traditionally exclusive asset class of fine art.
aShareX is a digital platform that facilitates auctions for fine art pieces, where participants can bid for either full or fractional ownership of the artworks. The company's mission is to make fine art investing accessible to as many people as possible. It allows individuals who make at least $50,000 per year or have $50,000 in investable assets to participate in its auctions. The platform is open not only for individuals but also businesses, trusts, pension funds, foundations and endowments.
The workings of aShareX are intriguingly different from traditional auction platforms. The key difference lies in the concept of fractional ownership. Fractional ownership is essentially partial ownership of an asset. In this case, aShareX facilitates the fractionalization of artworks, enabling buyers to purchase shares in a piece of art that they might otherwise not be able to afford. The number of shares one receives is proportional to the amount of their winning fractional bid as a percentage of the total artwork sale price.
When you buy a fractional ownership interest in an artwork, you receive shares representing that interest. The number of shares you receive is proportional to the amount of your winning fractional bid as a percentage of the total artwork sale price. Additionally, when copyrights permit, you may also receive a high-resolution image of the artwork for personal use.
On aShareX, the process of gaining full ownership of a piece of art is quite similar to traditional art auctions. Participants who wish to fully own an artwork can bid for outright ownership in the auctions. This option is open to bidders regardless of their citizenship, except for countries under embargo.
It's important to note that the platform is not only limited to fractional ownership but also accommodates full ownership of artworks. In the case of full ownership, the winning bidder takes outright physical ownership of the artwork after winning an auction. It's also worth noting that the Sourcing Fee (which covers storage, security, insurance, and administrative costs associated with maintaining the artwork) charged by aShareX does not apply to full bidders who take outright physical ownership of the artwork.
After winning an auction as a full bidder, the individual will be contacted directly by aShareX or their auction house partners to coordinate payment and shipping.
When an artwork is fractionalized, the fractional bidders who win the auction receive shares representing their proportional interests in a Delaware LLC. This Delaware LLC wholly owns a Cayman Corp, which in turn has the title to the artwork. The artwork is insured and is stored in a professionally secured art warehouse located in the United States or a museum.
aShareX's approach to pricing is purely market-based. Unlike other fractionalization managers that acquire the artwork, mark up the price, and then sell shares at that price, aShareX lets the market, or bidders, ultimately determine the artwork’s value. This approach ensures a fair and competitive pricing mechanism.
In partnership with auction house partners, aShareX conducts lending-grade due diligence on all artworks selected for auction. This due diligence typically includes an estimated value range for the artwork, a condition report, provenance, exhibition and publication histories, and a catalogue raisonné. This information is shared with prospective investors, enabling them to make informed purchase decisions.
To allow investors to track the performance of their investments, the platform provides annual appraisals on all fractionalized artworks. Investors can then manage their portfolios as they see fit, informed by these appraisals.
The decision to sell a fractionalized artwork is also left in the hands of the shareholders. During the 6th and 7th years of ownership, shareholders vote by a simple majority, based on the number of shares owned, on whether to sell the artwork. If the shareholders vote to hold the artwork in the 6th and 7th years, aShareX will sell the artwork in the 8th year and distribute the net proceeds at that time.
aShareX also operates a secondary market where sellers can list their shares for sale at a price of their choosing, and prospective buyers can list their offers to buy at prices of their choosing. At present, the platform accepts fractional bidders who are citizens of the United States. However, full bidders seeking to purchase outright ownership of an artwork can participate regardless of their citizenship, barring countries under embargo.
In conclusion, aShareX is a platform that aims to democratize the world of fine art investing. By utilizing the concept of fractional ownership and providing a wealth of information to prospective investors, they have created an accessible and transparent method of investing in high-value art.
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A portrait by British painter Francis Bacon will be publicly listed this summer, even as rising interest rates blur the case for investing in art
Carol Ryan of the Wall Street Journal examines fractional art ownership and companies defining the category.
What would the late painter Francis Bacon make of it all? A portrait of his lover is about to make its stock-market debut, giving the average Joe access to the rarefied world of serious art collecting.
One catch is that the mega-rich may have enjoyed the best spoils already.
A company named Artex is launching a roughly $55 million initial public offering of Bacon’s “Three Studies for a Portrait of George Dyer,” painted shortly after the couple met in 1963. Shares in the portrait will be sold for around $100 a piece and will list on a specially created art stock exchange based in Liechtenstein, giving regular investors the ability to buy and sell shares in a famous artwork on a stock exchange for the first time.
Trading is expected to begin in July. The portrait will then go on public display in a museum, rather than be squirreled away in a freeport — high-security, low-tax warehouses where wealthy collectors often store valuable works of art.
Artex has big plans to float $1billion worth of paintings over the next few months, each individual work with its own IPO. The company thinks supply will come from private collectors that are looking for a cheaper alternative to selling through auction houses like Sotheby’s and Christie’s, which can charge up to 20% in commission. Artex takes a lower cut of 3% of the IPO proceeds plus a small fee every time shares in the Bacon portrait change hands.
It is one of a number of companies trying to “democratize” elite art. Another innovation called aShareX will soon allow investors to club together and attempt to outbid wealthy individual collectors in auctions of high-value paintings. Masterworks, probably the best known business of this type, has offered fractionalized art worth more than$700 million to its investors since the New-York based company was launched in2017.
What’s new about Artex is that, as an exchange, it will be subject to tighter regulations than a private art fund. The Bacon portrait also should be a bit easier to cash in and out of as it will be publicly traded, and Artex will subsidize up to 3% of market value daily to provide liquidity. Private art funds that don’t offer the option to sell quickly have struggled to attract retail shareholders.
The first publicly listed artwork also raises the tantalizing possibility of a takeover of the Bacon portrait. If a billionaire collector or museum wants to swoop in with a bid, they must offer a20% premium to the average closing price of the shares over the previous 20 trading days, according to rules set by Artex. A rival bidder can then step in and offer even more, though unlike with a typical corporate takeover, shareholders don’t get to vote on whether to accept the offer.
Annualized returns by asset class 1995to2022Source: Masterworks
Post-war and contemporary artS&P500 total return Gold U.S.corporate bonds Real estate0%51015
Paintings can be a lucrative investment, once buyers are selective. Artworks valued below $1 million are risky, but returns on so-called “blue chip” art from the best-known artists like Bacon or Mark Rothko have trounced traditional asset classes for years. Between 1995 and 2022, masterpieces from the post-1945 era gained 12.6% a year. The S&P managed 9% and U.S. corporate bonds gained 4.9% over the same period, data from Masterworks shows.
The advantage of new “fractional” ownership models is that smaller investors who don’t have millions of dollars to shell out on a single painting can access the very top of the art market, where the big bucks can be made.
Like gold, high-end art has a solid reputation as an inflation hedge. Between 1974 and 1980, a pension fund for British Rail bought a collection of paintings as protection against spiraling prices in the U.K. economy. It made a real return of just under 6% a year after holding the works for around two decades.
The difference this time is that regular investors are being ushered past the velvet rope at what is likely to be the tail end of an art boom, when prices are already high. The market for masterpieces has been on a tear since the financial crisis in particular. From2009 through 2022, the value of art sold at auction for $10 million or more increased by 700%, according to the Art Basel & UBS Art Market 2023report.
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LOS ANGELES--(BUSINESS WIRE)--aShareX, Inc. (Art Share Exchange), the first and only auction-based universal trading platform dedicated to democratizing ownership of high-value alternative assets, announced it will launch this summer. The online exchange features transparent market-based pricing, investor control over asset disposition, and lower costs than other intermediary platforms.
“We take an investor-centric approach. Investors decide how much to invest at a market-determined price and control the timing of the asset’s sale. By combining direct control with lower costs of ownership, our system generates a compelling opportunity for investors.”
The patent-pending auction system enables fractional bidders – individuals or institutions bidding for partial ownership of an asset – to compete against each other as well as against bidders who desire 100% ownership of the asset. Fractional bids are aggregated into single bids that compete with 100% bids in a traditional auction format. When fractional bidders win an auction, they will be issued securities in an SEC-qualified Regulation A offering representing their ownership interests in the underlying asset. When a 100% bidder wins, they take possession of the asset with no securities issued.
“Fractional investing is the future of finance,” said Alan Snyder, founder and CEO of aShareX and also founder of Answer Financial, one of the largest online insurance marketplaces in the U.S., now owned by Allstate. “We take an investor-centric approach. Investors decide how much to invest at a market-determined price and control the timing of the asset’s sale. By combining direct control with lower costs of ownership, our system generates a compelling opportunity for investors.”
The aShareX platform plans to launch with auctions of blue-chip art, a $1.7 trillion market that enjoys $65 billion-plus in annual turnover according to art market research firm ArtTactic, and returns of 8.5% annually since 1950 as reported by Sotheby’s Mei Moses Index. As many investors look towards tangible assets as potential hedges against inflation, fine art’s strong historical performance and low correlation to traditional investments has drawn particular attention in recent years.
“aShareX empowers self-directed investors to control their own destinies. We aren’t a biased intermediary that dictates at what price an asset should be purchased or when it should be sold. Rather, we provide investors with the information necessary for making better decisions. With us, they can continue to use current financial advisors without incurring duplicative costs,” Snyder added.
aShareX allows institutional investors unlikely to buy and maintain the physical asset the opportunity to purchase a security that controls the underlying asset at market prices. At last, pension plans, foundations and endowments with this execution can reap the same benefits as other investors in a way that fits how they invest.
“This is a game-changer for institutions seeking uncorrelated alternative investment vehicles,” noted Leslie Wright, Chairman North America at Bonhams.
Building on its care for investors, aShareX has created Test Drive an AuctionTM, a gamified version of its auction system that allows prospective bidders to hone their auction skills against hundreds of computer-generated bidders in a risk-free environment. It is available now at www.asharex.com. Research shows many participants in traditional auctions are uncomfortable with the format. When buying a car, most test drive it first. Now, people can test drive an auction and develop bidding strategies that apply not only to aShareX, but to any auction. With Test Drive an AuctionTM, a participant can experiment as a fractional or 100% bidder in this real-time simulated auction to deliver knowledgeable confidence when engaging in a live auction with actual money.
After two years in development, aShareX is in partnership discussions with global auction houses interested in leveraging the platform to attract a large new cohort of buyers into their auctions. There is also significant interest from companies engaged in collectibles, precious gems, gaming, and real estate, seeking to license the aShareX execution as a SaaS integration.
Snyder concluded, “Our highly experienced executive team has built an industrial-strength execution that intends to address SEC requirements, including two FINRA-registered Broker-Dealers for the primary auction and secondary trading platform, a custodian, and an SEC-registered transfer agent.”
How aShareX Works
Investing is simple:
The first aShareX auction will be announced in the coming months subject to completion of regulatory requirements. For more information and to register an account, please visit www.asharex.com.
About aShareX
aShareX, Inc. (Art Share Exchange) is the first and only low-cost marketplace for buying and selling fractional shares of high-value assets that features market pricing and investor control, with an initial focus on democratizing ownership of blue-chip fine art. The patent-pending auction system allows, for the first time, fractional bidders to compete against one another and against 100% bidders in an integrated back office and secondary trading platform. aShareX benefits from an experienced and dedicated team with a proven track record of building innovative companies and products, including seven years’ experience lending against museum-quality physical fine art.
Legal Disclaimer
This press release shall not constitute an offer to sell, the solicitation of an offer to buy, or a solicitation of interest in any contemplated offering of, securities, nor shall there be any offer or sale of securities in any state or jurisdiction in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. None of the information in this press release should be construed as a recommendation or as investment, financial, tax or legal advice.
aShareX has not yet qualified with the SEC any offers or sales of fractional shares, and there is no guarantee that any such offer will be qualified. Any offering of securities will be made only by means of a duly qualified offering circular, which can be obtained by qualified investors through our platform. Information about our offerings must be read in conjunction with such offering circular in order to understand fully all of the implications and risks of the offering of securities to which it relates.
This press release contains forward-looking statements, which include, but are not limited to, statements concerning the Company and its plans and projections, whether express or implied. You should not rely upon forward-looking statements as predictions of future events. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, as more fully described in an offering circular. In light of such risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Past performance is no guarantee of future results.
Media Contact:
Wes Robinson
310.824.9000
wrobinson@olmsteadwilliams.com
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As our lives become increasingly digital, it is of little surprise that the art world is also shifting towards online sales. Aided by the mass migration of businesses onto the web as a reaction to coronavirus restrictions during the pandemic, online marketplaces provide a convenient and accessible way for collectors to buy and sell art from the comfort of their own homes. Galleries, auction houses and fairs are creating digital storefronts, while new platforms have devised inventive ways for individuals to purchase fractional shares of artwork.
Art market participants are increasingly looking towards digital solutions to traditional problems. According to the Art Basel and UBS Global Collector Survey 2022, 48% of all fine art sales took place online in 2022. Further, online-only sales at three major auction houses (Sotheby’s, Christie’s and Phillips) have increased nearly ten-fold in the past four years to just under $900 million in 2022. This phenomenon has also extended beyond individual transactions to live auctions; Sotheby’s reports that 91% of bids at these events were placed online in 2022, as reported in The Art Market 2023 published by Art Basel and UBS.
It is clear that online art transactions have become the industry norm, with participants expressing comfort at all levels of the market. In fact, virtually all (95%) high-net worth collectors surveyed by Art Basel and UBS in 2022 reported they had purchased artworks without viewing them in person first. Why might this be the case? Buying art online offers a number of advantages versus traditional methods: greater access to a wider range of artworks, improved convenience and affordability offered by online platforms, and increased price and informational transparency.
One of the biggest advantages to purchasing through online channels is gaining access to a wider range of artworks. While traditional galleries are geographically limited, online marketplaces can connect prospective buyers to art sellers across the globe. This offers anyone with an Internet connection the ability to purchase art, regardless of their location or financial situation.
Online channels also reduce market exclusivity. Galleries and dealers are typically restrictive, both in terms of the selection of artworks they offer and more importantly, to whom they allow as a potential collector for artists in their stable. Artworks offered online through either gallery or auction platforms are open to all individuals, provided they have the requisite funds.
Further, innovative platforms like aShareX (Art Share Exchange) offer the ability to purchase fractional shares of high-value artworks that are otherwise unattainable for most buyers. Individuals are able to bid for artworks just as they would in a traditional auction, but for either the entire piece or a fraction of its ownership. If fractional bidders win an auction, shares are issued to all winning bidders via an SEC-qualified offering in proportion to the individual amounts won. Fractionalization gives participants who might only be able to afford one higher-value work of art the ability to spread their investment across a number of pieces for a more diversified collection.
By democratizing the buying process, aShareX and others grant regular collectors or investors the opportunity to acquire blue-chip artworks that were previously reserved only for market insiders or the ultra-wealthy. This transactional liberation facilitated by online platforms creates greater liquidity for sellers via an increasingly diverse and expansive pool of buyers. Fractional buyers may also turn around and sell their shares via secondary marketplaces, providing an extremely convenient way to transact without necessitating an outright sale of the underlying artwork.
Purchasing online offers convenience and affordability not traditionally seen in the art market. Whether one is acquiring a smaller work from a marketplace or shares in a Picasso from an online fractionalization platform, transactions are made much quicker and often at a lower cost than traditional methods of owning art.
Dealings with traditional galleries or dealers can be a complex and lengthy process, if buyers are even able to negotiate in the first place. In addition to the ability to resell through the same platform, purchases and sales online are immediate, as opposed to a convoluted and drawn-out sales process with potential legal agreements and restrictions. Secondly, artworks offered directly through online platforms such as aShareX provide transparency in their provenance and authenticity. Artworks offered on fractionalization platforms are curated for their quality and legitimacy, moderating the research with which collectors and investors might otherwise be burdened.
Additionally, there are often extra costs for the buyer associated with the transportation, storage and insurance of a purchased artwork, which becomes more complicated based on the buyer’s geographic location. Individuals can forgo many of these extra time and cost demands by transacting exclusively online, and in the case of fractional ownership, can avoid many of these costs. aShareX, for example, maintains the original physical artwork and takes on the costs and logistics of storage and insurance on the investor’s behalf. When combined with potentially lower comparative price points, this results in a compelling method of acquiring art for those who are seeking to lower art ownership costs.
Artsy’s Online Collector Report (published 2019) revealed that the single greatest concern for individuals wishing to purchase art was the lack of publicly-available pricing, and was a primary reason that turned these individuals toward online channels. Galleries and dealers tend to be discreet and only divulge artwork prices once a relationship has been established; however, this can be time-consuming and intimidating. By purchasing online, prices are generally available up-front with no hidden costs, and self-directed buyers can browse or participate with confidence.
As an open auction platform, aShareX also offers a strategic advantage in facilitating transparent, market-based pricing. Clients can discern the true value of the artwork as established by competition between both fractional and 100% bidders. This contrasts with the risks of backroom deals, possible intermediary price manipulation, or other undisclosed information that might be hidden from a buyer utilizing traditional art buying avenues. Individuals are able to benefit from transactional clarity where there are no hidden contracts or unforeseen fees, and gain a unique market-based confidence in the artwork – or shares in an artwork – they are acquiring.
Online channels are rapidly growing in pace with evolving technology and buyer attitudes. The unique benefits of increased access, convenience, affordability and transparency are available to all individuals regardless of whether an artwork is purchased as a fractional ownership interest, offered by an auction platform such as aShareX, or the entire physical asset. With often lower costs to entry and few geographic limitations, purchasing art online can be an advantageous way to start collecting or investing.
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The sheer size of the global fine art market and headline-grabbing sales prices achieved at auctions may leave many wondering, “Should I participate, and if so, how?” High valuations are flashy, but further investigation reveals that fine art has experienced steady price appreciation, specifically a compound annual growth rate of 8.5% since 1950 (1). Forward-thinking companies in the art space have expanded the market to broader categories of investors by enabling them to participate at more accessible prices and without many of the challenges that accompany a typical fine art purchase. Blue-chip art is increasingly viewed as an investible asset class, as opposed to simply a luxury purchase for the ultra-wealthy; investors should consider how art compares to traditional investments and whether it should be included in a well-balanced diversified portfolio.
The fine art market is a mature market with the demonstrated capacity to quickly recover from global economic crises. Total sales rose 3% to $67.8 billion in 2022, up 35% over the pandemic-dampened 2020 figure, and also above the value of aggregate sales in 2019 (2). Sales at the higher end of the market, along with the rapid adoption of online sales, drove the quick rebound after the 2020 downturn. Growth at the top end of the market was propelled by an increase in spending power for the wealthiest collectors, as billionaire wealth is more than one-third higher than it was in 2019. A survey of over 2,300 high-net-worth (“HNW”) collectors, defined as those with over $1 million of investable wealth, reveals that the median expenditure on all categories of art rose from $72,000 in 2019 to $274,000 in 2021 (3). Thanks to strong demand from wealthy collectors along with innovative sales strategies such as virtual art fairs and online auctions, total art sales in 2022 remained strong despite uncertainty resulting from the ongoing COVID-19 pandemic, Russia’s invasion of Ukraine, and inflation.
Long-term price appreciation and a resilient market are prerequisites for any investor looking for non-speculative alternative investments. But does an investor gain additional benefits by including art in their larger investment portfolio? For those seeking downside protection enabled by true diversification, art may be a worthwhile investment. During the Global Financial Crisis, fine art experienced a decline of 24.5%, far less than the S&P 500’s 38% drop in 2008 (4). Art returns have a near-zero correlation with the asset classes traditionally found in investors’ portfolios. Art has a correlation of 0.09 to developed equities, -0.08 to investment grade fixed income, and -0.07 to high yield fixed income according to a report issued by Citi Private Bank. Many investors compare art to other tangible assets such as real estate and commodities (e.g., gold). However, the correlation between art and these tangible assets is also low. The correlation between art and real estate is 0.21, and the correlation between art and commodities is 0.19. (5). Both gold and art are physical and can typically be shipped around the world to take advantage of currency fluctuations or increasing demand in developing markets with growing populations of wealthy individuals. This attribute may help fine art weather recessions, particularly at the high end of the market where buyers are often more insulated from economic hardship.
Many investors look towards tangible assets as a hedge against inflation, and fine art’s strong historical performance and low correlation to traditional investments has drawn particular attention in recent years. Those who added alternative investments – such as fine art and other collectibles – to their portfolios were rewarded in 2022. The Knight Frank Luxury Investment Index, which tracks the value of “passion investments” such as fine art, classic cars, watches and wine, rose 16% during the year, outpacing equities, gold and inflation. Fine art led all index constituents with a 29% year-over-year increase. Interest in art as an alternative investment continues to grow, with 59% of UHNWIs (Ultra-High-Net-Worth Individuals) planning to invest in fine art in 2023 according to a Knight Frank survey (6). And there is still room to grow: UHNWI’s worldwide wealth tied up in art and collectibles was estimated to be $1.48 trillion in 2020, accounting for just 5% of their total wealth (1). This number could grow substantially as art continues to evolve from being a pure luxury purchase to an investible asset class. Wealth managers acknowledge this shift, with 85% believing fine art should be part of their service offerings (1).
What kind of art should a savvy investor consider? It is nearly impossible to predict which newly-discovered artist will experience a meteoric rise in popularity, or whether artworks produced by the current crop of ultra-contemporary artists will reliably hold their values for more than a few years. Investors drawn to art as a potential hedge against inflation that has exhibited steady long-term appreciation will look for well-established artists in evergreen genres that have experienced consistent demand. According to a UBS survey, 43% of HNW collectors will only buy from familiar artists, suggesting that demand for art produced by established artists is sticky (7). High-value art produced by well-established artists dominates the market; the majority of artworks sold for over $1 million come from the Post-War and Contemporary, Impressionist and Modern, and Old Masters genres. Between 2018 and 2022, artworks sold for $1 million or more at auction represented 4% of total lots, yet disproportionately accounted for 74% of total sales by value at the three largest auction houses (8). Museum-quality artwork commands interest from collectors at a global level, offering owners better liquidity and the opportunity to sell in a variety of worldwide markets to take advantage of currency fluctuations.
How should an investor participate in the fine art market? Because the art market is highly segmented, with evolving subjective tastes and cultural trends affecting each genre differently, diversifying across genres and artists is generally considered the optimal approach. However, there are no index-tracking investments that capture the performance of fine art as a whole. Building a diverse collection of blue-chip art requires a significant amount of capital, excluding most potential investors from making a meaningful financial allocation to fine art. Even for the ultra-wealthy who can participate, buying a piece of art can give rise to unique headaches and challenges. For some, art is both an investment and a passion purchase. These buyers are willing to accept the risks and expenses associated with displaying art in their homes. Investors who view art strictly as an investment, however, will likely look to safeguard their purchases in the most efficient way possible. Storing art in a dedicated warehouse with state-of-the-art security and climate control systems provides a level of protection that is nearly impossible to replicate in a residence without significant, costly renovations. Given the headaches, ongoing expenses and up-front cash requirements, creating a fine art investment strategy by purchasing individual artworks outright is difficult even for wealthy investors seeking a reasonable amount of exposure.
Fractional ownership removes many of the obstacles preventing access for the majority of investors interested in fine art. aShareX, Inc. (Art Share Exchange) is an innovative company that provides investors with the opportunity to purchase shares in museum-quality artworks. This enables investors who were previously priced out of fine art ownership to purchase fractional ownership interests at prices they can afford, all with meaningful regulatory oversight in an SEC-compliant ecosystem. The total sale price of an available artwork (and therefore price per share) is not set by aShareX but instead determined by the market. Investors buy shares via a transparent public auction, where they can bid for fractional interests in artworks against other fractional bidders or buyers looking to purchase the entire piece outright. Post-auction, shareholders in need of short-term liquidity can sell individual shares through the aShareX secondary market platform without having to find a buyer for the entire artwork. Moreover, the investors enjoy the option of selling the entire artwork at their discretion by simple majority vote. Shipping, storage, insurance and maintenance are all managed and paid for by aShareX, reducing transactional hassles for investors.
Through aShareX, investors can now build a diversified allocation to blue-chip art with an investment size that is affordable and tailored to fit their overall portfolio strategy.
1. The Sotheby's Mei Moses Indices . Sotheby's. [Online] [Cited: April 27, 2023.] https://www.sothebys.com/en/the-sothebys-mei-moses-indices.
2. Art Basel & UBS. The Art Market 2023. 2023.
3. —. The Art Market 2022. 2022.
4. Citi GPS. The Global Art Market. 2019.
5. —. Global Art Market Disruption. 2022.
6. Knight Frank. The Wealth Report. 2023.
7. Deloitte and ArtTactic. Art & Finance Report 2021. 2021.
8. Art Basel & UBS. A Survey of Global Collecting in 2022. 2022.
9. Sotheby's and ArtTactic. Peak Performance: The Art Market Beyond $1 Million 2018-2022. 2022.
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The popularity of fractionalized art ownership has exploded in recent years, offering a unique opportunity for individuals to participate in the art market without the expertise or funds needed to acquire an entire artwork. aShareX, an innovative online auction platform and marketplace, provides almost everyone the ability to participate in fractionalization and access the benefits it provides.
Here's how fractionalization with aShareX works: An artwork is first selected for sale based on both its quality and appreciation potential, and subsequently appraised by a professional to determine an estimate of its current market value. Next, the piece is offered via an online auction, where anyone can bid for partial ownership (fractional bidders), or bid for outright ownership of the entire painting. In this way, multiple individuals can compete against traditional buyers for collective ownership of the artwork.
When fractional bidders win an auction, aShareX issues to each winning participant, shares proportional to their percentage ownership. The artwork is then stored in a secure facility in the United States, or may even be displayed in a gallery or museum for public viewing. If a single individual bids for and wins the entire artwork, aShareX coordinates shipping of the physical artwork and no securities are issued, just like a traditional auction.
Over time, if the value of the artwork increases, the value of each fractional share also increases. By lowering the cost of entry down to a minimum bid amount of $5,000, many have the ability to partake in the art market and invest in an asset that was previously considered a luxury reserved for the ultra-wealthy. Deloitte and ArtTactic’s Art & Finance Report 2021 reported a 4.9% compound annual growth rate between 2005 and 2020 in the global fine art market. Incredibly, this factors in both the economic crash of 2008 and the coronavirus pandemic beginning in 2020. Looking at a longer period, fine art has appreciated at an annual rate of 8.5% since 1950 according to Sotheby’s Mei Moses Index. Art has therefore proven to be a durable asset with low correlation to the broader market that is worthy of consideration in any portfolio.
There are several additional benefits beyond appreciation that fractionalization offers to both casual collectors and serious investors alike: access to high-end artwork, diversification, and incredible ease of use.
Blue-chip artwork represents the most stable and least volatile category within the art market. According to Artprice.com, a leading art value database, prices for blue-chip artwork (comprising the top 100 artists by auction results) rose 3% during 2022. This figure is contrasted by an S&P 500 decline of over 18% for the same year, and is also greater than the return for the entire category of fine art in general. Accordingly, the increasing desirability for – and exclusivity of – this tier of fine art creates strong barriers to entry for individual investors, and fierce competition for collectors looking to own a one-of-a-kind piece.
By enabling individuals to buy fractional ownership interests in artwork, aShareX eliminates these barriers, allowing individuals to collectively purchase high-value artwork at a more accessible price, while also benefitting from any subsequent appreciation in value over time. In addition to its attractiveness for people with constrained budgets who are interested in investing in blue-chip artwork, it is also advantageous for collectors with limited opportunity due to scarcity or other factors, as a single artwork can be owned by multiple people at the same time.
Fractionalized ownership also allows for greater diversification. Instead of investing all their funds in a single artwork, investors and collectors can spread investments across multiple different artworks. This is a cost-effective way for investors to broaden their collection, and can help mitigate risk by offering exposure across multiple works, genres and artists, ensuring that a single piece of art does not disproportionately impact an investor's overall portfolio.
Diversification into art as an alternative asset may also improve the stability and performance of any investment portfolio, offering low correlation to other asset classes and acting as a hedge against inflation. In an article entitled “Why should art be considered as an asset class?” published by Deloitte Luxembourg in 2010, author Adriano Picinati di Torcello reports that for the fifty-year period from 1960 to 2010, art showed a -3.5% correlation to stocks. Further, according to a report published by Citi GPS: Global Perspectives & Solutions in March 2022, as inflation ticks up in combination with falling interest rates, the art market has conversely risen.
Fractionalized ownership provides opportunities for individuals to quickly and easily participate in the art market, without the burden of managing and maintaining artwork themselves.
Because the original objects being fractionalized are typically held by the offering platform, individual buyers forgo the costs and logistics of transportation, insurance and storage versus conventional ownership of an entire physical piece. Similarly, one does not need to identify and authenticate quality pieces themselves, as offered artworks are pre-selected by a team specializing in research and acquisition, with documentation and due diligence already completed. This allows for a more hands-off experience for those without the time or expertise required for such specialized undertakings.
aShareX also enhances the selling process, given that transactions are completed through a digitally-native platform. Instead of having to find one buyer for an artwork and facilitate a complex transaction, owners can sell their artwork to multiple interested buyers via the fractional auction system. The lower barriers to entry provided by fractionalization deepen the available pool of buyers, providing potentially greater liquidity than otherwise experienced in the traditional art market. Further, sellers who wish to retain partial ownership of their artwork are able to do so, and can continue benefitting from any future appreciation of the artwork as an investment vehicle.
Once an artwork is fractionalized and sold at auction, aShareX will provide buyers with the ability to sell their shares on a secondary marketplace. Alternatively, these individuals can also allow the platform to sell the artwork for them at a specified date in the future, or vote to have it sold earlier as a collective. This ensures that individuals who prefer a passive investment experience can still benefit from appreciation.
The flexibility offered by these innovative processes also enables easier portfolio or collection management. The ability to buy or sell art much more quickly than conventional methods allows individuals to rapidly adapt to personal circumstances, such as a need for cash in emergencies, changes in the goals of an investment portfolio, or even evolving tastes in collecting.
Fractionalization offers multiple advantages over traditional methods, for individuals looking to collect, investors wanting to capitalize on an uncorrelated alternative asset, and sellers interested in the many benefits of this high-tech solution.
Broadened access to high-end artwork democratizes the market and allows everyone to benefit from the historical appreciation of blue-chip art. Diversification, essential to both art collections and investor portfolios, is easier than ever given how fractionalized ownership allows you to spread your funds across multiple artworks. Innovative new processes such as fractional bidding and online secondary marketplaces allow for easier market participation and deeper liquidity while also removing the direct costs and hassle of transportation, insurance and storage.
In sum, fractionalization platforms like aShareX offer flexibility and affordability in a market that is traditionally very slow, expensive and complex.
For more information, please visit https://asharex.com.
Edward Joseph Ruscha IV (born 16 December 1937) is an American artist and key figure of the Pop Art movement. He has worked in the media of painting, printmaking, drawing, photography, and film, and is also noted for creating numerous artist’s books. Ruscha achieved recognition for textual, flat paintings incorporating words and phrases that were influenced by the “deadpan irreverence” of both the Pop Art and Beat Generation movements. (1)10990 Wilshire Boulevard Los Angeles, CA 90024
Ruscha was born to Roman Catholic parents in Omaha, Nebraska and grew up in Oklahoma City, Oklahoma. In 1956, he moved to Los Angeles to attend the Chouinard Art Institute (now California Institute of the Arts).After graduating, he worked as a layout artist for the Carson-Roberts advertising agency in Los Angeles, painting signs and creating graphic designs. In the early 1960s, Ruscha began producing works that reflected his interest in the vernacular of American culture. His paintings and photographs often featured images of gas stations, billboards, and other roadside attractions. During this same time period, he also began experimenting with text, incorporating words and phrases into his work.
His work was quickly recognized by critics and curators, and Ruscha was soon considered one of the leading figures of the Pop Art movement. In 1962, he had his first solo exhibition at the Ferus Gallery in Los Angeles. In the same year, his work was included, along with Roy Lichtenstein, Andy Warhol, Robert Dowd and others, in the historically groundbreaking exhibition “New Painting of Common Objects” at the Pasadena Art Museum, considered one of America’s first Pop Art exhibitions. (2) Ruscha also participated in several important group exhibitions, including “The American Supermarket” at the Paul Bianchini Gallery in New York (1964) and “Pop Art” at the Tate Gallery in London (1966).
The artist’s expansive oeuvre defies easy categorization, although it is infused with a dispassionate California cool. Since the 1960s,Ruscha has made paintings, drawings, photographic books, and tongue-in-cheek photo collages that demonstrate a keen interest in language and the idiosyncrasies of life in Los Angeles. In his most famous works, he places words and phrases from the colloquial and consumerist vernacular atop photographic images or fields of color – a strategy that situates him within a larger Pop Art lineage. He often paints and draws with unusual materials such as gunpowder, blood, and Pepto Bismol, drawing attention to the deterioration of language and the pervasive clichés in American culture.
In addition to his work as an artist, Ruscha is a successful author and publisher. He has written and published over twenty artist’s books, including Twenty six Gasoline Stations (1963), Every Building on the Sunset Strip (1966), and A Few Palm Trees (1971).
The artist’s work has been exhibited across the globe, and he has enjoyed solo shows at the Los Angeles Museum of Art, the Art Institute of Chicago, and Moderna Museet, in addition to the Venice Biennale, where here presented the United States in 2005. Ruscha has also produced many large-scale public works, including the Hollywood Sign Walk of Fame (1985) and the LAX Airport Way entrance sign (2010). He is the recipient of numerous awards and honors, including the Guggenheim Fellowship, the MacArthur Fellowship, and the National Medal of Arts. In 2013, Ruscha was named in Time’s annual list of the 100 most influential people in the world. At auction, his work has sold for eight figures, with a high auction record of 52,485,000 USD for Hurting the Word Radio no.2, sold at Christie’s New York in 2019. (3)
Ed Ruscha lives and works in Culver City, California.