Tax, Wealth, and Risk Management Graduate Program Blog

By Professor William Byrnes, Texas A&M University School of Law, and founder of the Wealth Management graduate program. This is the first part of a multi-part series regarding art from the perspective of investment and taxation.

For generations, high-net-worth families have viewed art collections as something to personally admire and display for social or status reasons. But the value of art as a tangible, movable asset was not lost on them. A robust art collection represented family wealth that served as a stable asset buffer, such as the custody of gold bars (without the weight), and could be passed to grandchildren with estate tax mitigation through favorable valuation.

Over the past two decades, however, art has been increasingly viewed through a more sophisticated financial lens: as an alternative asset class that can complement a diversified investment portfolio.[1] For example, an art-focused investment fund platform was established in 2001 that successfully launched eight art investment funds.[2]

This shift is not merely anecdotal. Family offices, wealth managers, private banks, and sophisticated investors now routinely include fine art and other collectibles (which, from a U.S. tax perspective, includes fine art) as a potential investment to mix with private equity, real estate, and venture capital strategies. These discussions are straightforward. Investors seek hard assets that may provide diversification benefits, are not necessarily correlated with public equity markets, and can preserve value during periods of inflation or market uncertainty. A Deloitte 2025 survey found that 40 percent of younger collectors (millennials and Gen Z) reported owning an art collection, and 98 percent consider these art holdings part of their overall wealth management strategy.

Yet investing in art differs fundamentally from investing in stocks, bonds, mutual funds, or real estate. Unlike publicly traded securities, art lacks standardized valuation pricing (e.g., financial ratios, EPS), transparent reporting (many sales are private or the buyer is anonymous), and liquid secondary markets (a role that auction houses, galleries, and art fairs vie for). This article surveys several reliable return-on-art financial studies that help investors considering art as an asset class understand both the opportunities and the unique risks.

Recent Market Sales Data

Fine Art Market Size

The premier fine art fair, Art Basel, and UBS co-publish the Art Market Report 2026, now in its tenth edition, authored by the fine art market specialist economist Dr. Clare McAndrew.[3] After two years of market contraction, Dr. McAndrew’s data showed that total fine art sales rose four percent in 2025 to $59.6 billion, based on 41.5 million transactions.[4] U.S. sales, she found, grew five percent to reach $26 billion, representing 44 percent of total global sales revenue. Yet, she cautions that the art market is subject to geopolitical tensions, tariff uncertainty, and economic volatility, which may suppress sellers’ willingness to dispose of their valuable artworks or limit cross-border sales.[5]

Personalized Experience for High-Value Goods

Online art sales revenue, which spiked to 25 percent during the COVID pandemic, has fallen to 15 percent of the market.[6] Moreover, online sales for auction houses focus on the middle and lower price ranges, with almost two-thirds of sales generated by artworks priced at less than $50,000, representing the $5,000 to $50,000 range. While the modern economy transforms into digital business models, high-value goods, and high net wealth individuals purchasing them overwhelmingly close a sale 87 percent in person, after inspection and human interaction.[7]

Bank of America’s U.S. Art Market Report of 2026 reported that from 2023 through 2025, the substantial growth in auction volume of Sotheby’s, Christie’s, and Philips in New York is driven by artworks priced under $50,000, the lower end of the price spectrum, which comprised 61.3 percent of total lots sold.[8] The BOA 2026 report found that the big three auction houses experienced a broad flight to quality in fine art sales of Modern, Post-War, and Impressionist artists, with other categories experiencing sharp price corrections.[9]

Historical Investment Return Data?

Stanford Business School researchers, examining data from the auction database BASI (Blouin Art Sales Index) from 1972 until 2010, concluded that art, as an asset class, generated an average annual return of 6.5 percent (though the BASI reported 10 percent).[10] These same economists computed a risk ratio, known as the Sharpe Ratio, based on 20,538 paintings repeatedly sold between 1972 and 2010, and determined that the Sharpe Ratio for art is 0.04, rather than the previously reported 0.24, compared with 0.30 for U.S. equities over the same period.^[11]

However, in 2010, Deloitte published a report based on several academic and institutional studies spanning 30 years, finding that art prices rose above inflation for other goods but were highly sensitive to economic slowdowns when demand dropped sharply.[12] The Deloitte study looked back over 10 years and found that the compounded annual return for art was 4.15 percent versus only 0.5 percent for all equities (recall the 2008 financial crisis).[13] A Morgan Stanley study concluded after the financial crisis that blue-chip fine art maintained returns during inflationary pressures.[14]

Two more academic studies found that art’s annual real return from 1951 to 2007 was 4 percent, noting that it beat bonds but trailed equities.[15] An analysis of the financial sales data over 60 years (1957 – 2016) showed a 6.24 percent nominal return, similar to the Stanford study finding.[16] From 2000 to 2025, the MM Continental Art Price Indices for the Americas, tracking auction sales of over 43,000 artworks by nearly 8,000 artists globally, using data from Sotheby’s, Christie’s and Phillips, found that art delivered a 4.4 percent CAGR.^[17]

Looking back over 50 years as a long-term investment holding, Deloitte’s 2025 report found that art’s cumulative annual return of 9.06 percent was comparable to equities’ 9.56 percent. This Deloitte study, using the Mei Moses All Art Index, concluded that the 10-year look-back risk favored art, not equities, at 13.8 percent to 20 percent.[18] However, over 50 years, the risk substantially converged until favoring equities, 17.8 percent to 17.2 percent. In 2024, Morgan Stanley began including art in its capital markets analysis and estimated that art would deliver 4.9 percent annual returns over seven- and 20-year horizons.[19]   

Is Art An Accepted Investment Asset?

In its 2025 Art & Finance Report, Deloitte, based on extensive annual surveying, found 76 percent of collectors support integrating art into wealth management offerings.[20] 37 percent stated that they were collecting art for its own sake, driven by emotional, aesthetic, and cultural value, not with an investment outlook.[21] Yet, when Deloitte factored in age, the firm found that 98 percent of younger collectors consider their art holdings as part of their overall wealth management strategy. Moreover, 40 percent of the younger collectors, millennials and Gen Z, reported owning an art collection, compared to only 17 percent of baby boomers and Generation X.

Why Are Investors Turning to Art?

The appeal of art as an investment begins with scarcity. A publicly traded company can issue additional shares. Governments can issue additional debt. An established artist, however, can only create a finite body of work.

Scarcity, combined with growing global wealth and the interests of millennials/Gen Z, has assisted long-term value appreciation for many categories of art. High-net-worth individuals increasingly compete for works by established artists, while museums, corporations, and international collectors add additional demand.

Art also offers a psychological benefit that few financial assets can match. A share certificate or brokerage statement provides little emotional value. A painting displayed in a home, office, or building, can generate daily personal enjoyment, generate external social and wealth status, and simultaneously serve as a tangible investment. For many investors, that combination of personal enjoyment and potential value appreciation, or at least maintaining value in relation to inflation, creates a compelling proposition.

Opaque Valuation

But artists, artworks, and art trends present opaque valuation challenges for investment forecasting. A substantial portion, 77 percent, of sales revenue for 2025 was derived from private collectors.[22] When adding sales to art advisors and interior designers who act on behalf of private collectors, individuals account for 87 percent of fine art revenue. Many first-time collectors start off at lower price points through smaller galleries.[23]

Robust, transparent market data related to emerging artists or art trends is lacking. Time consuming substantial personal research, and reliance on curator expertise (without the legal fiduciary duties), is required if seeking to be first in on an art trend and identifying emerging artists that allow upside value growth. Determining value often requires appraisals, auction comparisons, gallery sales data, and inevitably, professional judgment.

Potential art collectors and investors read the anecdotal stories about paintings purchased for a few thousand dollars (e.g., at an estate sale, a secondhand store, or directly from an ‘unknown’ artist) that later sold for millions. It happens, and these stories attract headlines. But actual investors realize these are limited exceptions, like an angel-round investment in private equity that generates a 30x return on an earlier-than-expected exit.

Blue-chip artists whose works are regularly sold through major auction houses operate in a vastly different, data-available market than emerging artists selling through regional galleries or online platforms. Returns vary dramatically depending on timing (e.g., the adage that the death of a popular artist leads to wealthy family members with a remaining supply of finished works), the artist’s reputation as seen through a public lens, provenance, art trends, and broader economic conditions.

Inevitably, successfully earning returns for art investments requires extensive research. Yet this statement is just as true for any investment. But the data sought is different. Investors should investigate factors such as an artist’s exhibition history, gallery representation, collector base, museum exposure, auction results, and critical reception.

Also, before the purchase of a high-value artwork, an investor needs provenance diligence, which is like obtaining ‘clean title’ in real estate. The documented ownership history of a classic fine artwork is particularly important. Incomplete provenance records create legal risks of prior theft and expropriation. Moreover, the fine art market has struggled with forgeries and attribution disputes. Thus, artwork authentication is critical but adds to the transaction’s costs.

Diversification Benefits?

One of the strongest arguments collectors and curators make for art ownership is tangible asset diversification, as previously discussed. Traditional portfolios are heavily influenced by stock and bond market performance. Art values are often driven by different factors, including collector demand, cultural trends, museum exhibitions, and artist recognition. Because these drivers differ from those affecting public securities, art may provide disjunctive portfolio diversification benefits.

However, investors should avoid viewing art as a substitute for a properly diversified investment portfolio. Art is probably best approached as a complementary asset within a holding of alternative assets. It is well known that financial advisors recommend alternative assets without liquid markets, which occupy only a modest percentage of an investor’s overall portfolio.

Liquidity, Transaction Costs, and Time Horizon

The greatest challenge for art versus traditional public equities is liquidity. Art may require weeks, months, or even years to sell at an acceptable price. The liquidity challenge is not insurmountable. Selling closely held businesses, partnership interests, and collectibles also face this challenge. Finding a buyer often involves galleries, dealers, private brokers, auction houses, or collector networks, which may incur high transaction costs. Seller commissions, auction fees, insurance expenses, transportation costs, and storage fees can materially reduce the net return. Thus, art as an investment asset needs to be balanced with a longer time horizon for realization than many conventional investments.

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[1] Arthur Korteweg, Roman Kräussl, and Patrick Verwijmeren, Is Art a Good Investment? Insights (Stanford Business, October 21, 2013), available at https://www.gsb.stanford.edu/insights/research-art-good-investment.

[2] See The Fine Art Group, Art Investment, at https://www.fineartgroup.com/services/art-investment.

[3] Dr. Clare McAndrew, The Art Basel and UBS Art Market Report 2026 by Arts Economics, at 19, 35 (Art Basel and UBS 2026), available at https://theartmarket.artbasel.com. Art Economics is exclusively focused on the fine and decorative art market for private and institutional clients.

[4] See also Investing in Art: A Growing Asset Class, Insights (Citron Cooperman, Aug. 4, 2025).

[5] Dr. Clare McAndrew, The Art Basel and UBS Art Market Report 2026 by Arts Economics, at 25, (Art Basel and UBS 2026), available at https://theartmarket.artbasel.com.

[6] Dr. Clare McAndrew, The Art Basel and UBS Art Market Report 2026 by Arts Economics, at 30, (Art Basel and UBS 2026), available at https://theartmarket.artbasel.com.

[7] How High–Net Worth Consumers Shop For Luxury Goods: New Research Shows Just 10% Do So Exclusively Online, Anna Perling, Forbes, Apr. 22, 2026, available at https://www.forbes.com/sites/forbes-personal-shopper/article/how-high-net-worth-consumers-shop-for-luxury-goods/.

[8] 2026 U.S. Art Market Report, Bank of America, in association with ArtTactic, at 17, https://www.privatebank.bankofamerica.com/content/dam/ust/articles/pdf/US-Art-Market-Report.pdf.

[9] 2026 U.S. Art Market Report, Bank of America, in association with ArtTactic, at 24, https://www.privatebank.bankofamerica.com/content/dam/ust/articles/pdf/US-Art-Market-Report.pdf.

[10] Arthur Korteweg, Roman Kräussl, and Patrick Verwijmeren, Is Art a Good Investment? Insights (Stanford Business, October 21, 2013), available at https://www.gsb.stanford.edu/insights/research-art-good-investment.

[11] Arthur Korteweg, Roman Kräussl, and Patrick Verwijmeren, Is Art a Good Investment? Insights (Stanford Business, October 21, 2013), available at https://www.gsb.stanford.edu/insights/research-art-good-investment.

[12] Why should art be considered an asset class? Adriano di Torcello, Deloitte Luxembourg (2010), available at https://www.deloitte.com/lu/en/services/consulting-financial/research/art-as-investment.html.

[13] Why should art be considered an asset class? Adriano di Torcello, Deloitte Luxembourg (2010), available at https://www.deloitte.com/lu/en/services/consulting-financial/research/art-as-investment.html.

[14] Reviewing Art as an Asset Class and Its Historical and Potential Returns, Global Investment Committee, March 27, 2025, available at https://advisor.morganstanley.com/the-davis-yost-group/documents/field/d/da/davis-yost-group/Research_Reviewing_Art_as_an_Asset_Class.pdf.

[15] Renneboog, L D R & Spaenjers, C 2009, Buying Beauty: On Prices and Returns in the Art Market, Center Discussion Paper, vol. 2009-15, Finance, Tilburg, available at https://repository.tilburguniversity.edu/bitstreams/311df4f3-ec07-4d7d-8569-39965eafb044/download. See also, Rachel Campbell, Art as a Financial Investment, The Journal of Alternative Investments, Spring 2008, 10(4) 64 – 81, DOI: 10.3905/jai.2008.705533 (using the Mei Moses, acquired in 2016 by Sotheby’s, and Art Market Research art indices as the two most widely quoted indicators of art market performance).

[16] Updated investment data analysis by Prof. Luc Renneboog, Investing in Art: Returns, Risks, and Market Dynamics Over Six Decades, May 22, 2025, https://financialforum.be/en/bfw-digitaal/investing-in-art-returns-risks-and-market-dynamics-over-six-decades. The dataset includes 2,874,652 auction records of paintings by 155,156 artists, with a median nominal price of $4,000.

[17] Art & Finance Report 2025, Deloitte 399 (2025).

[18] Also see, Demystifying Art Indices, Morgan Stanley (Feb. 9, 2026), https://www.morganstanley.com/articles/art-market-indexes.

[19] Reviewing Art as an Asset Class and Its Historical and Potential Returns, at 5, Global Investment Committee, March 27, 2025, available at https://advisor.morganstanley.com/the-davis-yost-group/documents/field/d/da/davis-yost-group/Research_Reviewing_Art_as_an_Asset_Class.pdf.

[20] Art & Finance Report 2025, Deloitte 193 (2025), http://www2 .deloitte.com/content/dam/Deloitte/lu/Documents/financial-services/artandfinance/lu-art-finance-report.pdf

[21] Art & Finance Report 2025, Deloitte 194 (2025), http://www2 .deloitte.com/content/dam/Deloitte/lu/Documents/financial-services/artandfinance/lu-art-finance-report.pdf

[22] Dr. Clare McAndrew, The Art Basel and UBS Art Market Report 2026 by Arts Economics, at 98, (Art Basel and UBS 2026), available at https://theartmarket.artbasel.com.

[23] Dr. Clare McAndrew, The Art Basel and UBS Art Market Report 2026 by Arts Economics, at 94, (Art Basel and UBS 2026), available at https://theartmarket.artbasel.com.