High-net-worth collectors with money to invest remain bullish on the art market, according to the latest UBS Investor Watch Pulse Art report.

UBS surveyed 404 U.S. investors with $1 million in investable assets who had spent $10,000 or more on art or antiques in the past two years. 

The New York-based financial services firm found that 68% of respondents were optimistic about the art market as a short-term investment, compared with 66% who felt the same over the short term about the global stock market. An even greater majority of respondents (72%) were optimistic about the art market over the long term, compared with the global stock market (70%). 

A new generation of high-net-worth collectors is demanding more from their investment than just an artwork they can hang on the wall or install in their living room, the report said.

UBS found that 59% of respondents—86% of them millennials, 52% Gen X, and just 18% boomers—said they were considering sustainable options in managing their art collections, such as recyclable packing and alternative delivery. 

A majority of those respondents (86%) said they were willing to pay more for sustainable options, with 25% willing to pay as much as 25% more.

More than a fifth of collectors (22%) said they preferred to buy artwork from dealers and galleries; 16% from private collectors; 16% at auctions; 13% from studios; and 10% online.

For a majority of these investors, art collecting is not a short-term proposition. More than half (55%) said they planned to pass on their art collection posthumously, while 45% said they would pass on their collection while still living. 

Most said they planned to leave their collection to family or friends, but worried that their heirs would not care for their artwork with the same diligence they had. As a result, 73% said they had shown their heirs how to care for their art collection.

A majority (51%) fretted that their heirs would not be able to get a fair selling price for their collection.

Not all art collectors said they planned to leave their collections to their heirs. More than half of respondents (53%), the vast majority of them millennials (73%), said they planned to leave some or all of their collection with museums.

Respondents by and large had a favorable opinion of museums as custodians of their collection for the purpose of education (83%), cultural history (82%), as a display venue (81%), influencing contemporary art (73%), and as centers for social change (71%).

A majority of respondents (53%), most of them millennials (71%), also said they were planning to leave their art collection to charitable organizations.

According to the survey, a majority of art collectors are women, more than half of whom (51%) said they made purchases of more than $1 million in artworks over the past two years, compared with 15% of men. Women also have larger collections, with an average of 88 pieces compared to 27 for men. Two-thirds of women (68%) said they planned to donate their artworks to museums, compared with 44% of men; 69% planned to donate their collections to charity, versus 43% for men.

While women are increasingly investing in the art market to a greater degree than men, both genders of all three generations are primarily investing in male artists (63%), rather than female ones (37%).

Laura Hastings, a media relations representative for UBS Global Wealth Management – Americas, was interviewed about the report by Financial Advisor:

FA: Why are high-net-worth investors a little more optimistic about the art market than the global stock market since art investments are less liquid?

LH: 2018 was a year of steady growth for the global economy, yet heightened U.S.-China [trade] tensions, tighter monetary policy, and worries over the possibility of a global slowdown contributed to the first annual decline in global stocks since 2011. For the art market, it was a year of growth. As per The Art Basel and UBS Global Art Market Report, sales across 2018 brought the global art market to its second-highest level in a decade, representing a rise of 9% since 2008. The U.S. did particularly well and sustained its position as the world’s largest art market, accounting for 44% of sales by value—or a total of $29.9 billion, the highest recorded level to-date.

FA: Are art collectors investing in artwork because of its aesthetic appeal or in the belief that a collectible retains its value when stocks might not?

LH: Art collecting is a passion activity, offering pleasure and the thrill of a new perspective. It offers the chance to leave a legacy that goes beyond money. We understand that it is an asset for our clients with emotional value and sometimes financial value, but we don’t advise them to look at art as an investment class. It offers emotional dividends.

FA: Is it possible for an artwork to lose its collectible value if its not produced by a well-known master?

LH: We find that well-selected, good quality pieces endure value.

The UBS art collection is considered one of the largest and most important corporate collections of contemporary art in the world, according to a UBS fact sheet. To make more works available to the public, the company said it has recently launched the UBS Art Gallery in its New York headquarters at 1285 Avenue of the Americas.