A fascinating article on Bloomberg.com recently highlighted the globally based Artist Pension Trust (APT), which is claimed to hold the largest global collection of contemporary art, including 10,000 contributed artworks from 2,000 artists in 75 different countries. APT offers artists a unique blend of artist collective and hedge fund.
Launched ten years ago by high-tech entrepreneur and art collector, Moti Shniberg, APT is a promising fix to what is widely viewed as a broken art market. That is, "[t]hose who create art – even valuable art – often don't profit from it nearly as much as their collectors or even, on occasion, their own dealers. Shniberg's solution is a combination of skipping the middleman (artists get to bypass their dealers by selling through APT instead)" and altruistic motives (sale of an artist's work is shared with the other artists).
The model behind how APT works is quite simple. A board of curators invite select talented artists from around the world to join their regional pool with 249 other artists. These regional pools represent the largest art markets, such as New York, Los Angeles, London, Hong Kong, Shanghai, and the like. APT also has a global pool with a capacity of 628 artists. Over a period of 20 years the artworks in the trust are gradually sold for the benefit of the APT artists. According to APT's website, the funds from the net proceeds of each artwork sold are distributed to the artists as follows: "72% are distributed to the artists in the trust, with 40% to the individual artist and 32% among the artists in that trust based on the number of artworks they have deposited. The remaining 28% are used to cover the operational costs of the trusts."
The article goes on to note the success of APT depends on three factors—(1) whether there is a rise in value of the trust's body of artwork; (2) whether that body of artwork can be sold by the trust at the peak of its value; and (3) whether there is demand such that enough art collectors exist to buy the body of artwork that APT would like to sell.
The current value of APT's art collection is reported to be around $125 million, however, in view of existing commitments of future donations by trust artists, its value is said to be closer to $500 million.
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