What will you do if someone tells you that they love investing in MFs? Start thinking of ways to stifle a yawn, of course – the last thing you want to listen to is a passionate discourse on Mutual Funds! But what if they are referring to their lucrative MF Hussain collection? Read on to see how art and funds combine!
Whoever said art is not practical will now have to eat their words. Real estate, gold and equities may soon become passé – art funds are the latest kids on the investment block. In India it all began with the Yatra Fund that was launched in 2005 and did so well that the promoters launched another version 2 years later. Here is a glimpse through Yatra’s journey on the road less travelled.
So what is it all about? Simply put, the Yatra Fund is a mutual fund dedicated to art. It is a close-ended fund with a four-year maturity period, and invests in a select range of artworks. Its target market is the growing community of “high net worth” Indians and NRIs.
And how does it work?Your investment in the Yatra Fund starts with an initial contribution of Rs. 1 million, followed by another million or more within a year. The fund manager sources artwork directly from artists or through auctions, but rarely from art galleries. The fund declares its net asset value on an annual basis. After the maturity period, the works are sold and you start getting the returns. Apart from the principal amount, there are administrative fees and hurdle rates involved.
Are you wondering how it has actually performed since launch?The fund painted a pretty picture in the very first year when it raked in over Rs. 100 million and brought in returns of 38.5%. In December 2006, the trustees launched a new scheme, Yatra 2 Growth Fund, which runs on similar lines as the earlier version. This time the focus will be on contemporary artists from India and other emerging markets and not just on Indian masters as in Yatra 1.
With the international spotlight turned on anything Indian, the promoters are looking forward to a colorful future. The current budget proposal to impose a capital gains tax on art transactions would further promote art collection and trade. Yatra is facing stiff competition from other funds like Osian’s Art Fund and Crayon Capital Art Fund, which has even started an exclusive scheme for NRIs. How will these new funds do? Well we’ll just have to wait and watch!
Set your heart on art? Do you think art funds are a novel way to make money? Or does the commercialization of art enrage you?
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