A Guernsey-domiciled fine art hedge fund has been launched.
The Art Trading Fund is like a mutual fund, except it buys and sells art instead of stocks. It is aimed at investors who want to diversify their investment portfolios.
What particularly distinguishes it from previous art funds is the Art Trading Fund’s strategy of buying put options (options to sell at a fixed price) on stocks that are believed to have a high correlation to the art market, such as Sotheby’s and luxury goods companies like Richemont. The idea of shorting these stocks is that, if the art market falls, these stocks will fall too, and the fund can turn these options into cash.
The Art Trading Fund buys and sells art via its global network of dealers, artists, auction houses and galleries. Usually works are kept for no longer than a year, with the fund focused on three to 12 month returns.
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