The concept of infinity investment has received increasing attention in recent years. It refers to leveraging financial tools to securitize alternative assets like arts and whiskey, making them investable for average investors. This innovative approach holds promise to disrupt the niche art finance industry traditionally dominated by opaque private sales. For example, ARTEX exchange, backed by Liechtenstein royal family, aims to be the world’s first regulated stock exchange for trading stakes in renowned artworks. Meanwhile, asset management firm Masterworks allows retail investors to own shares in iconic paintings. If successful, infinity investment could unlock trillions worth of privately owned paintings and sculptures for public investment. However, issues around valuation transparency and liquidity need to be resolved first.
ARTEX exchange spearheads artworks IPO
The ARTEX exchange, launched by Prince of Liechtenstein and former Citigroup executive, obtained regulatory approval to operate a Multilateral Trading Facility (MTF). It plans to publicly offer shares in Francis Bacon’s iconic George Dyer triptych paintings, with an IPO valuation of $55 million. By splitting ownership into millions of equity shares, ARTEX aims to attract both hedge funds and ordinary art lovers to invest in this rare masterpiece. The exchange touts built-in price stability due to Bacon’s collectors appeal and believes its stock could outperform S&P 500. However, critics argue an artwork’s value depends largely on intangible aesthetic enjoyment unlike regular stocks, making valuation unpredictable.
Masterworks platform securitizes paintings into fund
Founded in 2017, Masterworks raised over $650 million to purchase more than 150 artworks, selling ownership stakes to investors starting from just $20. It operates more like a blue chip mutual fund, focused on works with proven resale value. Masterworks claims a 17%+ annualized return from its 8 successful exits so far, by selling the paintings in 3-10 years then distributing profit proportionally to shareholders. It also supports secondary trading of existing stakes. This passive investment model resonates with inflation-weary investors seeking portfolio diversification. Yet others argue the global art market comprises hundreds of fragmented sub-markets without transparency in actual sales data, raising doubts whether high returns could sustain long term.
Regulatory obstacles remain for alternative assets
While pieces like Bacon’s triptych could be ripe for IPO experimentation given their exceptional rarity and value, applying the same stock exchange approach to mainstream artworks would be challenging. A key appeal of physical asset investment is the emotional enjoyment and knowledge gained from collecting. Reducing art solely to financial return vehicles require compromises in privacy and transparency hard to reconcile. Moreover, attempts by past firms like SplitArt to launch art stock indexes failed to gain traction. Though large brokerages have found success issuing art collateralized bonds before, skepticism persists whether infinity style assets could become a sustainable mass investment.
Infinity style investment platforms like ARTEX and Masterworks represent bold attempts to inject modern exchange mechanics into the alternative art asset class, hoping improved accessibility could unlock its financial potential. But regulatory obstacles around illiquid valuations and disclosure issues remain. Their long-term viability would depend on striking the right balance between creativity and rational asset pricing.