The most successful art investors are profit driven, numbers savvy, and always on the lookout for opportunities.
Futuregrowth portfolio manager Michael van Rensburg epitomises these qualities and has been investing in art for more than 20 years.
“Ever since I was a young school boy, I’ve been spotting opportunities to buy and sell things to make a profit,” says Michael. “By the time I was a teenager, I had developed a keen interest in art, and when I realised there were good profits to be made in the art world, I was hooked.”
Michael bought is first serious artwork in 1994 – a William Kentridge. This was the start of a lifelong interest in South African contemporary art, and Michael has since invested in a wide range of artists. He currently follows artists such as William Kentridge, Dylan Lewis, John Meyer, Robert Hodgins, George Pemba, Norman Catherine and Lionel Smit.
He attends auctions and exhibitions regularly to determine where the demand is lying. “Attending auctions is the best way to identify trends because of the willing buyer, willing seller principle,” says Michael. Michael also keeps in contact with gallery owners and the artists themselves to keep his finger on the pulse.
He buys mostly for profit and does not let his own sentiment or personal taste get in the way. “My decisions are all very much investment driven, but every now and then this will include art that I really like. These pieces tend to become part of my home collection which I’m not planning to sell,” says Michael.
Art is a relatively risky investment, and no one understands this better than Michael. Some of his biggest mistakes include selling a Maggie Laubser before 2003, which is when the market turned on her works; as well as selling some of William Kentridge’s artworks too early.
Due to the excellent talent of South African artists, the work of many local artists has become sought after internationally. This means it has become necessary to keep a keen eye on what is happening in the global art world, in order to make good investment decisions.
Unlike his day job, managing money market funds, which by nature have a very short term investment horizon, art investing is about being in it for the long haul.
“Art is very much a long-term investment; it doesn’t mature and it is subject to global cycles,” says Michael. “As we all know, you need to apply different investment strategies to different asset classes, and art, as opposed to money markets, is about as different as you get.”
However, when it comes to making investment decisions, Michael believes there are six universal keys to success:
Know that your investment will pay off, but it takes time.
- Meticulous research
You need to continually develop your knowledge of the market. Make sure your information is always up-to-date and that you understand the driving forces in the market.
If you’ve done your research thoroughly, be confident in your decisions. Resist the urge to start second-guessing.
- Know your prices
If you want to spot a good opportunity before everyone else does, you’ll need to know your prices back-to-front at all times.
- Take quick, decisive action
When you see a good deal, move quickly.
- Don’t get sentimental
Everyone knows this is a golden rule of investment, but it can be particularly tempting to get sentimental about art. Remind yourself regularly not to get too attached.
That said, in his role as Portfolio Manager, together with Nazley Bardien, of the recently launched Old Mutual Institutional Short Term Interest Fund, Michael draws extensively on five of the six principles above to manage this new fund, which offers a short-term solution for corporates with spare cash. The only principle that does not apply is the first one, as the nature of the fund does not require Patience as a virtue, in this particular case.