NEW YORK (MainStreet)Despite the ailing economy, Bloomberg's European Luxury Goods Index is up more than 50% since 2011 while art exceeded S&P 500 returns of 7.0% since 2002.
"People are seeking to diversify risk and seeing art as a long term safe haven," said Philip Hoffman, founder and chief executive officer of the Fine Art Fund Group in London. "Art has shown a very solid 5% plus compound return across all sectors over the past 100 years."
Although the Mei Moses fine art index declined 3.28% in 2012, Huffman invests in art not wine, another leisure investment.
"Rare wine is not in diminishing supply always, because people hold wine and much of it does not get consumer," said Hoffman. "It is at the lower end of the ultimate commodity while art is the most expensive asset in the world per square inch. If you are investing in rare contemporary or modern art, we've been seeing around 17% to 18% compound return on investments in that sector."The Mei Moses Fine Art Index tracks the art market going back to 1810 and gauges future values and compares returns to more traditional financial indexes.
"The supply of rare art is very small whereas there are millions of different first grade bottles of wine. There are not 20 Rembrandts left in private hands," Hoffman said. "Once a rare painting like Picasso or Degas is sold or gifted to a museum it is unlikely to ever be resolved and this contributes to the diminishing supply while demand is still growing considerably."
Although art is interesting, at an entry level minimum investment of $250,000 a painting, wine is most likely more affordable for the average American investor.