How Banksy Could Save Your Portfolio From A Disaster

Banksy has the power to turn random wall owners into millionaires in a matter of minutes. Through his provocative anti-establishment commentary and a shroud of mystery surrounding him, Banksy has become one of the most sought-after living artists. As his popularity grew, so did the price tag of his work.

The bidding wars over his ‘simple genius’ pieces often reach eight figures at the world’s most prestigious auction houses. Naturally, owning ‘a Banksy’ has gained another appealing dimension – it has proven to be a spectacular financial investment.

Banksy’s artwork depicting hospital workers as heroes was donated to Southhampton general hospital during Covid and later sold for $23 million. (Photograph: instagram.com/banksy/)

While most would think you need to be in the 1% to even entertain the thought of owning Banksy’s art, that is no longer the case. One Banksy piece brought a staggering 32% annualized net returns to regular investors on Masterworks. Just like with all of the art offered on its website, the company first acquired the piece and then let regular investors buy its shares after they had been filed with the SEC.

Thus far, over $700 million in art has been offered on the website and surprisingly, the most successful exits don’t have Banksy’s iconic signature on them. They belong to other contemporary artists who you might not have heard of but who are nonetheless selling for millions.

George Condo’s piece reached a 39.3% annualized return and got sold after a 532-day hold period. Albert Oehlen’s painting secured 36.2% annually and Masterworks members who invested in it got to split the substantial gains after only 354 days. Finally, artwork by Simone Leigh raked in a jaw-dropping 325% annualized net return and exited the Masterworks collection after only 36 days.

To maximize the potential for exits like these, Masterworks goes the extra mile when it comes to diligence. Only 3% of considered pieces ever get to be offered on the site. A painting needs to satisfy a number of standards and show outsized potential for great future returns. Some of those are available for investment right now.

Great art has the potential to generate substantial returns in any market conditions. From 1995 to 2022, post-war and contemporary art has outperformed the S&P 500, US Corp Bonds, Gold and Real Estate.

However, fine art investing becomes particularly attractive in times of tightening due to its low correlation to other assets during economic stress and low loss rate. Therefore, many investors are allocating anywhere from 5% to 25% of their portfolio to fine art. Click here if you’re thinking about doing the same.