Blue chip art refers to works by established, renowned artists that have withstood the test of time and achieved broad recognition. As an alternative asset class, blue chip art can be an attractive addition to an investment portfolio when approached prudently. By diversifying across high-quality pieces and taking a long-term buy-and-hold approach, investors can aim to generate stable returns over time while also enjoying the intrinsic value of owning fine art.
Focus on works with proven value appreciation
The most reliable blue chip artworks for investment are those that have demonstrated consistent price appreciation historically. This generally includes paintings, sculptures, and other pieces by the most influential artists of the 19th, 20th, and early 21st centuries. Key factors to evaluate are prior sales data, significance of the artist, medium used, size and condition of the work. Targeting the right blue chip artworks is essential for investors to maximize upside.
Diversify across artists, periods, and mediums
Since the art market can be volatile, it is important for investors to diversify their blue chip art portfolio across different artists, artistic periods, geographic regions, and mediums. For example, an investor may choose to allocate across Impressionist, Modern, Post-war, and Contemporary works using a mix of painting, sculpture, photography and even digital mediums. Diversification helps reduce concentration risk and smooth out returns over long periods.
Take a long-term, buy-and-hold approach
Unlike stocks that can be traded daily, blue chip artworks tend to be held for many years or even decades in order to realize substantial appreciation. By using a long investment horizon and avoiding the temptation to time the art market, investors allow their diversified collection to gradually mature in value. Remaining patient and delaying any sales also has the benefit of reducing transaction costs and tax liability.
A prudently constructed blue chip art portfolio held over long periods can produce attractive risk-adjusted returns for investors while also providing intrinsic enjoyment. Success requires targeting established artists, diversifying across pieces, and taking a patient buy-and-hold approach.