Masterworks is opening fine art investing to the masses

Investors can buy into a Monet painting for $21.05 a share; a Warhol piece goes for $20 a share

Sep 25, 2018 @ 5:08 pm

By Sarah Min

For 15 years, Scott Lynn has been collecting midcentury artists. His collection of abstract expressionists includes Jackson Pollock, but he has a particular soft spot for Clyfford Still, one of the lesser-known artists in that movement. Although Mr. Lynn has seen his collection appreciate rapidly, he realized the asset class was too expensive for most people to invest in.

Enter Masterworks, an investment platform Mr. Lynn started in 2017 with a uniquely democratic approach. Instead of paying more than $2 million to purchase a painting, you can pull out a twenty to buy a share in it.

"When we ask people to invest in a Claude Monet or an Andy Warhol, it's very exciting because they haven't had the opportunity in the past," said Mr. Lynn, chief executive officer at Masterworks.

It could be an interesting idea for advisers' clients who want to invest in art but are wary of the big financial commitment.

"It could give a client that's very passionate about art some exposure and maybe some pride in owning a piece of valuable artwork," said Anthony N. Badillo, lead financial planner at Gen Y Planning.

Buying shares in art might also, however, be too new a concept for most investors to dive into.

If clients want to diversify their portfolio with any kind of art investment, whether in full or partial ownership, advisers should review what portion of their portfolios they can devote to it.

"If they're passionate about it and they really want to do it, we would want to learn exactly what they're investing in, and we would make sure that it's not a significant amount of it, that it would be small enough that they would sleep over it, but large enough that they're pursuing something they're passionate in," Mr. Badillo said.

(More: Tapping experts is key when clients invest in art)

Since 2017, Masterworks has acquired Warhol's "1 Colored Marilyn (Reversal Series)," which is currently being reserved for 2,030 people. Priced at $2 million, it is being offered for $20 per share. Investors can invest in the painting with just $1,000. Meanwhile, 742 people are interested in reserving their shares for Monet's "Coup de Vent," which is being offered for $6.9 million, at $21.05 per share.

For investors, Mr. Lynn said, the process is very much like buying a share in a company when it goes public. Masterworks files an offering document for each painting as a special-purpose vehicle with the Securities and Exchange Commission.

Investors who are interested in purchasing art should consider how paintings similar to the one they're purchasing have appreciated historically, Mr. Lynn said. They can look at lesser-known emerging artists, or, like Masterworks, they can consider household names.

"We're focusing on those blue-chip artists who have a track record and will continue to be important in the future," Mr. Lynn said.

In 2019, Masterworks hopes to make a trading platform available on which investors can buy or sell its shares. After they've purchased shares and are shareholders of a painting, they can also vote to keep or sell the painting if a collector makes an offer for it.

For custodial reasons, investors who purchase shares in paintings won't be hanging their investments on their walls. But the process of purchasing shares can help advisers evaluate the client's priorities and, still more, review their net worth to assess the best uses of their funds.

At the moment, Masterworks' paintings are in storage. The company is planning to open a gallery next year to house the collection, which will be open to the public.


What do you think?

View comments

Recommended for you

Upcoming Event

Oct 22


San Francisco Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Featured video


Why millennial demand for ESG is falling on deaf ears

Editorial director Fred Gabriel and senior columnist Jeff Benjamin say there's a disconnect between the big appetite for environmental, social and governance funds in 401(k) plans and their offering.

Latest news & opinion

Blucora to buy another broker-dealer with tax-focused advisers

Blucora is paying $180 million in stock for 1st Global, with 850 advisers.

Finra panel dismisses $100 million case involving drop in Merrill Lynch stock

Former brokers bringing charges related to stock losses during financial crisis have had 15 cases proceed, four stopped so far.

Principal-Wells Fargo retirement deal would be among largest ever

Acquisition would be in line with trend of record keepers seeking to gain scale to combat fee reduction.

Finra panel dismisses $100 million case involving drop in Merrill Lynch stock

Former brokers bringing charges related to stock losses during financial crisis have had 15 cases proceed, 4 stopped so far.

ESG options scarce in 401(k) plans

There's growing interest among plan participants, but reluctance to add funds that take into account environmental, social and governance factors persists.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print