A new art fund that will invest in around 200 exclusive works of art has been authorised for launch in Jersey.
Lead counsel throughout the formation of the fund, Collas Crill, believes the Berenberg Art Capital Fund Limited is an example of the trend for investors and managers to move into other investment strategies, to complement – and hedge against – more traditional offerings that are struggling in the current economic climate.
Collas Crill fund specialist Adrian Odell said: “Although alternative investment funds are typically associated with hedge funds, private equity and property funds, the relative slowdown in these sectors during the past few years has been compensated somewhat by funds being allocated to long term investment in other alternative asset classes. Encouragingly, we have recently experienced strong growth in new fund formations in niche asset classes, such as art and diamonds, together with more traditional private equity and property funds.”
Berenberg Art Capital Fund Limited was authorised as an Expert Fund by the Jersey Financial Services Commission on 1 October 2012.
The fund will acquire art from auction houses, individual art collectors, galleries, museums and other sources. During the term of the fund, it is expected that the fund will invest in approximately 200 works of art. The fund will invest in five different categories of art work: Old Masters, Impressionist, Modern Art, Contemporary Art 1960-1985 and Contemporary Art after 1985.
Adrian Odell said: “The fund’s ability to generate returns may be enhanced by attractive purchase opportunities in the market arising from the long-term trends of increasing scarcity and a widening circle of art connoisseurs.
“The diversified target portfolio consists of different art styles and artists for the purpose of reducing risk and enhancing the overall potential for return on investment.”
Berenberg Art Advice GmbH, Germany, will act as the investment advisor of the fund. The fund will invest in a portfolio of art with an aim of capital appreciation. The fund will be closed-ended, and have a life of seven years, subject to three times one year extensions.
The fund, the board of which will make all investment decisions in relation to the fund (in particular, the acquisition or disposal of art investments), will be advised by the investment advisor, which will co-ordinate implementation of decisions of the board as part of the investment process detailed in the private placement memorandum.
The investment advisor will be assisted by an advisory committee comprised of six members, four of which will be nominated by the investment advisor and two of which will be from Fine Art Management Services Limited, UK. The depositary to the fund will be The Fine Art Group Limited, UK, which also has extensive art expertise. The depositary will in turn utilise the services of transport and related services, where required.
The administrator of the fund will be Stonehage Fund Services Limited, Jersey. The auditors will be KPMG, Jersey. Collas Crill acted as lead counsel throughout the formation of the fund.