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In 2023, the cultural event of ‘Barbenheimer’ saw both Greta Gerwig’s Barbie and Christopher Nolan’s Oppenheimer gross more or less US$1 billion each. In its wake, some investors were looking longingly at the rich hills of Hollywood. At least one investor, Matt Ong – the founder of alternative assets provider Ctrl Alt – suggested that the attention stirred up by Barbenheimer could signal a new age of investment in alternative assets (a term used to describe anything that isn’t cash, bonds or stocks).
Given the exclusive nature of the movie business both behind and in front of the camera, one might not think investing in movies would be possible for individuals. However, through funds centred on alternative assets, the small-time investor has the chance of buying a piece of the pictures while also rationalising said investment as socially beneficial (i.e., funding the arts).
Alternative asset investing may be a nifty way to diversify one’s portfolio while also pledging money according to their personal interests. However, how does one square the highly quantitative world of finance and investing with the inherently subjective world of the arts? While the film industry has a clear answer (box office returns), how might one quantify the value of other, less commercially geared art – let alone quantify a return on that work?
Yieldstreet, a firm based in New York City, purports to have an answer. Founded in 2015, the company offers a range of products engaging the private market. One is their Art Equity Fund, now in its fifth generation and which accepts investments between US$15,000 and $1m. The company’s sleekly designed website reminds of user-friendly investing apps like Robinhood and Plus500. Such an interface has at least a two-pronged effect: one (a positive), democratising previously exclusive investing circles; and two (less so), making it easier than ever to quickly make that investment without doing one’s due diligence.
Indeed, the fine print for the Art Equity Fund reveals that its value stems from the appraisals of third parties engaged by Yieldstreet to label art works with an equivalent dollar amount. Without falling down the logical rabbit hole and critiquing the entire world of art valuation, the impact investor can still think critically about involving art in the fund management world.
Such a financial relation is dubious when the product has no value in relation to the public economy—and especially when correlated to art objects which can spike in popularity with something as unpredictable as a change in tastes or the artist’s death. Additionally, the private nature of most art ownership complicates matters. As quoted in Barron’s, Bank of America’s art services chief Drew Watson remarked “If you’re measuring risk by standard deviation from the average [of] annual returns, that’s going to be much greater for art, especially contemporary art, than it is for other financial assets, which are clearly way more liquid too.”
This is to say: opening up previously exclusive avenues of investment is probably a net positive, yet the knowledge curve for new investors is steep. That quickly becomes an issue when risky investments are as easy to make as ordering dinner – all a click away.
Such behaviour manifested last year with the release of Dumb Money, a Hollywood product that directly portrayed the world of investing from a clearly comic perspective. It dramatised the r/WallStreetBets fiasco that resulted in the skyrocketing of Gamestop stock in early 2021. Yet, as with many satires (look no further than the variably ironic admiration of protagonists from American Psycho and The Wolf of Wall Street), that comedic approach did not stop some moviegoers from replicating the behaviour they saw on screen. At least that was the fear, and it led the Australian Securities and Investment Commission (ASIC) to run an advertising campaign based on that very notion.
When dealing with any investment, the responsible impact investor will be emboldened by research – not by hype. Alternative assets may be a viable strategy for some, but the framework behind how the assets are valued must be as legitimate as possible. Otherwise, it might not be worth the risk, no matter how loudly the fanfare rings from the Hollywood hills.
