Manager Update - Q1 2016


Zhang Ding, Orbit -4, 2014, acrylic on linen on aluminium, 127 x 475 cm. (Recent acquisition)

In March, TEFAF released its much awaited 2015 Art Market report, which validated sentiments that the market topped in 2014. 2015 market turnover declined by a substantial 7% verses 2014, to $63.8 Billion. The contraction came mostly from Emerging Markets, led by China which saw a huge decline of 23% in volumes, resulting in its share of the global art market falling to 19%, trailing the UK’s 21% share and the US at 43%. The US market grew 4% in 2015, bucking the overall trend. 

The good news is that in 2016, the art market seems to have gotten off to a much better start than most feared. Q1 auction results and Art Fair reports suggest that the market is still healthy and active. Auction sell through rates are comfortably in the 75-90% range for the major auctions and to the surprise of most, for their April 2016 auctions in Hong Kong, Sotheby’s reported a marked 17% increase in sales compared to 2015.

2015 Fund Performance

In parallel to the decrease in the overall art market as well as in all other investment asset classes, the NAV of Art Vantage PCC Limited, which owns the Tiroche DeLeon Collection, decreased by 7.77% in 2015; its first negative year since inception in 2011. The value of the artwork portfolio declined 4.09%. Management fees, artwork promotion and fund operating costs account for the rest of the decline. It is a disappointing result for investors, but compares favorably with overall results for the art market (e.g. Skate’s Art Stock Index which declined 45%) and particularly for art in Emerging Markets. The outperformance is attributable to strong selections, particularly in the South Asia and Africa sub-portfolios, and to a strong realization of a YZ Kami work in the Middle-East portfolio, see analysis. Overall net investor return since inception in 2011 is + 23.46%.

Q1 2016 Activity Highlights

This quarter I travelled to NY for numerous meetings, mostly concerning our upcoming Latin American exhibition at Mana’s Glass Gallery - see press release. In February I spent a day in Paris, primarily to see the Chinese exhibition at the Louis Vuitton Foundation, where more than half the artists selected are in our collection. I then went on to London for the auction week and upon return to Israel gave a talk about art collecting/investing at a local art fair.

In March I travelled to Hong Kong for the Art Basel fair which was excellent and very practical for networking purposes. The main highlights from there: the immense success of our resident artist Cui Jie who was selected by Hans Ulrich Obrist for an exhibition at the K11 Art Foundation and saw demand for her works explode, with all works at both her galleries selling out on opening day; the visit to the collections of the M+ Museum, with an extra-ordinary selection of master works donated by Uli Sigg, and that of uber-designer Alan Chan; and finally the strengthening ties with a group of Korean collectors who had some interesting thoughts about possible collaborations that we will explore.

We sold 2 works in the 1st quarter, the highlight being the absolutely awesome result we achieved for one of our Rodel Tapayaworks, Big Fish, which almost tripled the artist’s previous auction record when it sold for over $150’000 at Salcedo auctions in Manilla, generating a net 17X and 73% IRR since acquired by the collection in 2011… the benefits of spotting strong talents early, mingled with a touch of luck.

We also acquired 20 works this quarter, 7 in Africa, 6 in China, 4 in South East Asia and 3 by Caribbean artist Firelei Baez (Latam portfolio) who we highlight in this quarter’s newsletter. We also highlight Kader Attia after acquiring a third work.