(Bloomberg News) Investors are being invited to join a European-based group that plans to buy about $80 million worth of art and forecasts annual returns of 12 percent.
The Art Collection Fund will acquire high-quality modern, contemporary and even tribal works over a four-year period. The pieces will be sold after six years, or earlier, through private sales and auctions, the Luxembourg-based company said in an e- mailed statement.
"The fund is aimed at people who want to invest in art and who haven't time to be collectors," the fund's founder and chief executive, Stanislas Gokelaere, 43, said in an interview. "We want to educate them and bring them close to this world."
Investors are diversifying after returns declined from financial markets and real estate. Still, some funds that look to art as an alternative asset class have struggled to raise money or prove themselves as consistent providers of returns. In 2009, New York-based Skate's Art Market Research delayed a review of such vehicles after several failed to achieve their target capitalization.
Gokelaere, a former head of mergers and acquisitions at the brewer InBev, is an established French collector of tribal art, as well as of modern and contemporary works. Bernard Steyaert and Florence de Botton, former European-based executives at Christie's International, are the other members of the team.
"We'll be buying blue-chip works priced between 100,000 euros ($130,400) and 3.5 million euros," Gokelaere said. "We won't acquire cutting-edge pieces and we'll be concentrating on slightly lesser-known names that appreciate in a slower, stronger way. We want to avoid bubbles."
Works by second-tier abstract expressionists Joan Mitchell and Arshile Gorky were suggested as possible investments.
About 65 percent of the collection will be devoted to modern and contemporary art, Gokelaere said. Participants will be able to borrow and live with works equivalent to the value of their commitments.
The minimum investment in the fund, scheduled to open formally in April, is 500,000 euros. Investors will be charged 2 percent per annum management fees and 20 percent of the net proceeds.
So far, the fund has attracted unconfirmed commitments of about 10 million euros -- half the targeted first closing --from investors in Belgium, Switzerland, Luxembourg, Italy and the U.K., according to Gokelaere. The total target capitalization is 60 million euros.