Ideally, to build a diversified art collection, you should invest in both emerging artists and established artists. There are upsides to investing in both kinds of artists, and by doing so, you are opening yourself to a broader swath of opportunities.
Remember that ’emerging’ and ‘established’ are rather ambiguous terms and can mean slightly different things to different art collectors. To learn how to differentiate between the two kinds of artists, we recommend you read What is the difference between emerging and established artists.
Why Should You Invest in Emerging Artists?
Art from emerging artists is typically more affordable than art from established artists. Consequently, if you make the right investment decisions, the art you collect can appreciate far beyond the initial investment value.
However, not all emerging artists will progress and become established artists or desired by collectors. The potential benefit of collecting the relatively inexpensive art of an emerging artist should be weighed against the risk that they do not “make it”. Not making it will unfortunately be outcome for the vast majority of emerging artists.
If an emerging artist doesn’t “make it”, the value of art purchased from them will likely decline or stagnate. Accordingly, knowing how to evaluate if an emerging artist has the skills and determination to ascend to the ranks of an established artist is of vital importance.
Why Should You Invest in Established Artists?
Investing in the art of established artists can offer a much lower risk level than the art of emerging artists. Established artists have already proven popular with art investors over a long period. This quality is desirable from an investment perspective as there is a strong likelihood that their art will continue to be popular with art investors. Although, with the changing tastes of collectors, this assertion is not guaranteed.
Side-note: The Lindy effect is a phenomenon that I think applies to art investment. The Lindy effect theorizes that the longer something has been in existence (like an artist’s popularity over several generations), the greater likelihood it will continue to exist into the future.
The downside of investing in the art of established artists is that the rate at which their work appreciates can be slower than the art of emerging artists as they rise in popularity. While this rule typically holds true, it is not always the case. Some established artists, who may be under appreciated or overlooked, and can see meteoric rises in the price of their art over a very short time, as collectors rush to correct the imbalance in the art market. For an example of this phenomenon, we recommend you read Why should you be investing in women artists?
Investing in Blue-Chip artists
The art of the most desirable and celebrated established artists (aka. Blue-Chip artists) are typically the less risky art investment of all.
In some instances, a group of influential collectors and gallerists will be interested in keeping the prices of Blue-Chip artists elevated. Thus, they may work toward this goal by funding/ organizing exhibitions and retrospectives at major institutions. With such forces in play, the art of these established artists can be the safest form of art investment available.
Learn more about investing in the art of Blue-Chip artists
You May Also Like:
Check out Masterworks and Yieldstreet to explore art funds that let you purchase shares in million-dollar artworks from blue chip artists like Banksy, Kaws, and Yayoi Kusama.
Read more: Art ETF: Masterworks vs. Yieldstreet