London: The Art Trading Fund, which describes itself as the world’s first “regulated fine art hedge fund”, says Charles Saatchi will advise it on contemporary art purchases.
Chris Carlson and Justin Williams, founders of the Guernsey-registered fund, said in a telephone interview that Saatchi, an advertising mogul and art collector, would help them select works by Western artists as well as from the emerging markets of China, India and West Asia.
Lending expertise: Ad mogul and art collector Charles Saatchi.
“We were approached by the Saatchi Gallery to become corporate patrons,” said Williams. “Being cheeky boys, we wanted something in return. The Saatchi team will bring global expertise to our plans to enter new markets.”
The fund will pay the Saatchi Gallery a percentage of the profits it makes from works acquired through the gallery, according to the agreement signed in April, Carlson said. Saatchi, who in 2005 sold his Damien Hirst shark to hedge fund manager Steven A. Cohen of SAC Capital Advisors Llc. for $8 million, is also known for his Saatchi Your Gallery website.
Managers of art investment funds, which buy and sell a pool of works for a set fee and a share of any profit made, have been promoting art as an alternative asset class in the last five years. So far, the London-based Fine Art Fund, which has attracted $110 million of assets under management since it started in 2004, is the only one of these vehicles to remain conspicuously active in the West.
In March, concern about weaker demand in the Western art market prompted investment vehicles Meridian Art Partners and the Fine Art Fund to say they would also be expanding in the world’s emerging economies.
Annabel Fallon, the Saatchi Gallery’s press officer, confirmed the arrangement with the fund. The gallery is due to open in its new London home—the Duke of York’s Headquarters, Chelsea—this summer at a date to be fixed. “The Empire Strikes Back: Indian Art Today” is among the planned shows.
The Art Trading Fund has a short-term arbitrage strategy of 3-12-month returns and with a hedge to provide protection, says its website, www.theartfund.co.uk.
Carlson, a former equities trader at UBS O’Connor Ltd and Deutsche Bank AG; Williams, a publisher-turned-art dealer, and their partner, the traditional artist Roy Petley, began attracting investment in the Art Trading Fund in April 2007.
Carlson and Williams said their first fund closed in August 2007, with a capitalization of $10 million. The fund had a total of 12 investors made up of a mix of private banks, asset managers and wealthy individuals.
In common with other art investment vehicles, the Art Trading Fund’s capitalization has been lower than originally planned. In December 2007, in an interview published by www.wealthbriefing.com, Carlson said the Art Trading Fund was looking to raise $98.6 million by the end of that year.
Carlson said that during Fund 1’s first quarter of trading, which ended on 31 December, investors had received returns of 9% inclusive of management fees and other costs.
Fund 1 had traded in a combination of second-tier post-impressionists such as Henri Martin and Henri Lebasque, and eight unnamed living artists whose work it has exclusive rights to sell through galleries, Williams said.
ATF’s Fund 2 will close at the end of June, said Carlson and Williams, and has a target capitalization of $50 million. So far, the second fund has received $35 million in inward investment, they said. Asset allocation will be evenly spread between contemporary art from the West and emerging markets, they said.
“Over the next 18-30 months, we expect to see strong overall returns in the art market,” said Carlson. “But volatility will create opportunities. Expertise will pay off. Lack of it will be punished,” he added.