The NAV of Art Vantage PCC Limited performed -7.77% in 2015, our first negative year since inception in 2011. Most of the decline is attributable to the -4.09% performance of the art portfolio. While this is a disappointing absolute result, it compares favorably with the overall art market performance (e.g. Skate’s Art Stock Index -45% in 2015) and particularly for art in Emerging Markets. Overall net investor return since inception in 2011 is + 23.46%, see Fact Sheet.
2015 Contribution Analysis
From a regional perspective, once again we evidence big divergence in the performance of different regions, which accentuates the need to maintain broad diversification to reduce overall portfolio volatility.
The majority of the decline comes from our Far East portfolio which fell a substantial -18% in 2015, in line with a fall of -23% in transaction volumes in China in 2015 (Source: TEFAF Art Market report). With a 38% allocation at the start of the year, the Far East is by far our largest sub portfolio. Most of the loss in 2015 is attributable to a substantial downward revaluation of our two Ai Weiwei works. Unsurprisingly, these same works were the biggest contributors to portfolio’s +19.2% increase in 2014. A reversal which points to the difficulty in valuing Weiwei’s market. We maintain the view that despite tactical mistakes he is making in building his market price (no catalog raisonne, unclear editions, too many galleries, over-exposure), which arguably are part and parcel of his practice, Weiwei’s importance in the 21st century is not to be underestimated and the value of his significant works is yet to rise substantially and will eventually narrow the huge pricing gap that is prevalent verses Western artists of similar stature.
Our concentrated bets on a few younger artists in South Asia, such as Rodel Tapaya (for whom we set an astounding new world auction record in Q1 2016), Jigger Cruz and Ruben Pang, are starting to bear fruit as their auction results build up and external valuations we receive better reflect the strong market for these artists. They are significant contributors to the +10% performance in our South Asia portfolio in 2015, following a meagre +3% increase in 2014.
After performing +10% in 2014, our Africa portfolio again produced +5.4% in 2015. Our Middle East portfolio performed well in 2015 with +8.3% (primarily attributable to the sale of our YZ Kami painting which set a new world auction record for the artist, despite being a repeat sale) following a +6.2% performance in 2014.
A combination of diverging market performance and 2015 acquisition activity have resulted in bigger exposure to South Asia and Africa in 2016. The same factors have also resulted in a bigger allocation to two-dimensional works. Year on year allocation have changed as follows:
- Far East down -5% to 33%
- South Asia up +4% to 23%
- Africa up +2% to 13%
- Latam down -1% to 19%
- Middle East and Eastern Europe unchanged at 6% and 4% respectively
- Paintings up +4% to 35%
- Installations down -5% to 20%
- Other mediums remain broadly unchanged.
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