Yieldstreet have just released their latest art fund for accredited investors (Art Equity Fund V). The fifth art fund will try to replicate the success of their previous four funds that currently have an average appreciation of nearly 25%.
If you are not familiar, an art fund is comprised of multiple artworks from artist that Yieldstreet believe will appreciate in value by the time it comes to sell the collection (in about 5 years). In previous articles, I concluded Yieldstreet’s art funds are perhaps the closest thing on the market to an art ETF, with Masterworks coming in a close second.
Art Equity Fund V
For Art Equity Fund V, Yieldstreet has sourced artworks from artists who have been undervalued for quite some time, but are currently experiencing a huge bump in popularity. The four artists in the fund are Jack Whitten, Howardena Pindell, Jacob Lawrence, and Ernie Barnes.
In Yieldstreet’s previous four iterations, the funds were comprised of artworks only from huge Blue Chip artists like Yayoi Kusama, George Kondo, Keith Haring, etc.
So, Art Equity Fund V is employing a different strategy with its fifth fund, and hoping to capitalize on the greater scope to appreciate from these less established artists rather than the more-secure known blue chip artist. Does this mean this fund will outperform the 25% average appreciation of first four funds? Only time will tell, but this one does seem to be a “greater-risk greater-return” strategy.
Minimum investment amounts for the Art Fund V is $15,000 to $1,000,000. So, going off the past performance of Yieldstreet’s art funds, a $1,000,000 investment would generate a return of $250,000. Although you might want to expect even higher returns for Art Fund V considering the artists included in the fund.
Diversified Art Debt Portfolio III
Alongside Art Equity Fund V, Yieldstreet have also opened an Art debt fund (Diversified Art Debt Portfolio III). This is a loan which is secured by a 10 artworks from Jean-Michel Basquiat and Keith Haring.
This portfolio is designed to generate interest payments above 6.0%, which is higher than other fixed income assets like 1-year treasury bonds. Minimum investment amounts for the Art Debt Portfolio is $10,000.
In the unlikely event of a default, the artworks in the debt fund would need to sell for only 50% of their appraised value to fully recoup 100% of any capital you invest. So, the amount of dividends this portfolio is paying out every 4 months really overplays the risk here, which is a huge advantage for the investors like you and me.
If you have any further questions about investing in art funds, like that offered by Masterworks or Yieldstreet, please reach out to mark@easelinvesting.com, and we would be happy to set you on the right path. Additionally, you can learn more about Art ETFs here.
