Should You Invest In Red-Chip Artists?

A term that has recently appeared in the art world is ‘Red-Chip artist’. While you may not have heard the term before, you have likely heard of a few artists that fall into this category. Artists such as Beeple, Ayako Rokkaku, Amy Sherald, and Jerkface are sometimes considered Red-Chip artists.

Like the term “Blue Chip” and “Emerging”, the term Red Chip can mean slightly different things to different people. But, the term can still be used to loosely classify a group of artists that share some similar characteristics.

Common characteristics of these artists can include:

They are typically young (under 40 years old).
They achieved success in a very short time-frame.
Their career is somewhere in between that of an emerging artist and an established art.
They actively sell their artwork on the primary and secondary market themselves.
They are not reliant on traditional gallery representation to open up sales and other opportunities.
They can comfortably live off the proceeds from selling their artwork.
They have a high engagement with their fans/ collectors on social media.

What you should consider before investing:

Will they remain or grow more popular?

While currently popular, Red-Chip artists have not proven to be a reliable long-term investment. The length of time they have been popular with collectors is too short to ascertain whether they will remain popular in the future accurately. This is why you should only collect Red-Chip artists with full knowledge of the associated risk.

*_{^{Installation view of Jerkface: Villainy at Maddox Gallery, London}}*

What is your investment time horizon?

If you are investing in art for short term gain, Red-Chip artists may fit your profile for an appropriate investment. You can (somewhat) mitigate the risk that these artists may not be popular in the future if your investing strategy is short term.

However, also take note, Red-Chip artworks can often be over-valued due to their intense popularity at a certain time. Consequently, this phenomenon eats into your potential returns.

Do you like the work of Red-Chip artists?

It is recommended that you like the work you collect, as noted in Do you have to like the art you collect. However, if you are looking at short term investment opportunities, appreciating the work you collect becomes less important.

*_{^{Ayako Rokkaku, Acrylic on canvas, 200 × 300 cm, Painted live at ComplexCon L.A.}}*

Do you have time to keep up with the latest trends?

Investing in Red-Chip artists can require more regular research and keeping up with the latest art world trends.

Are Red-Chip artists too prolific?

You may need to be careful when buying editions from Red-Chip artists as they often collaborate with brands and designers. Therefore, there can be an abundance of their products/merchandise/editions out in the primary and secondary markets. The above warning is necessary because the artworks are often unsigned and unnumbered, and potentially open editioned.

Open editions mean the artist can make more of the artwork anytime they wish, which can affect your edition’s value.

*^{_{Amy Sherald, “The Bathers”, 2015, Oil on canvas, 74 x 72 inches [courtesy of the artist and Hauser & Wirth]}}*

Final Thoughts

You should not be discouraged to try your hand at investing in Red-Chip artists. In fact, after answering some of the above questions I posed, perhaps Red Chip artists are exactly the type of investment you are interested in pursuing. But please note that these artist (much like emerging artists) can be high risk/high return investment choices.