Article on Art as an Alternative Investment in Fiduciary Accounts

Michael Duffy (Goldman Sachs and Co.) recently published an article entitled, Painting a Not-So-Pretty Picture, Prob. & Prop., Nov./Dec. 2014, at 11.  Provided below is a portion of the article’s introduction:

On the evening of November 12, 2013, Christie’s held the most successful contemporary art auction in history, bringing in over $691.5 million.  The highlight of the night was the record-breaking sale of Francis Bacon’s Three Studies of Lucian Freud, which went for $142.4 million dollars–$87 million above the storied auction house’s estimate.  Six months later in its May 12, 2014, evening sale, Christie’s astounded the art world yet again by smashing its prior record and brining g in $744.9 million at auction, setting record prices for 11 artists including Alexander Calder, Barnett Newman, and Joan Mitchell. 

Such eye-popping headlines continue to fascinate and titillate the public’s imagination and have spawned fiery debates among scholars as well as laymen about whether financial investors, including trustees, should consider trading art (that is, “art and collectibles”) for investment purposes under the doctrines of modern portfolio theory.