Masterworks is a new platform that gives the everyday investor the chance to invest in fine art, worth up to $30 million by investing in shares of fine art.
With Masterworks, you’ll have the option to:
- Diversify your portfolio
- Invest in blue-chip artwork
- Earn profits from 8% to 30%+
- Protect yourself against inflation
- Protect yourself against stock market volatility
But is it safe and legit?
Let’s take a deep dive into this Masterworks review and find out if Masterworks is the best art investment platform for you.
What is Masterworks?
Masterworks is a fine art investing platform that combines the element of investing in blue-chip art worth up to $30 million with the element of fractional investing.
Typically, the world of fine art investing is exclusively available to the high roller, glitz, and glam world.
Thanks to Masterworks, virtually anyone can now partake in high-end art investing.
Masterworks Pros and Cons
Let’s take a big-picture look at the Masterworks pros and cons:
| Pros | Cons |
|---|---|
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Track record of 9% to 39% net annualized returns |
Fees are in line with hedge funds |
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Masterworks handles the entire process of finding, purchasing and storing artwork |
Fine art does not have an income stream, so you should only invest thinking about capital appreciation |
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Artwork is insured and stored in secure facilities |
You need to do a phone interview before you start investing |
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Offers secondary market to buy/sell your art shares |
Art world is unregulated |
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Leading research team in the art market to analyze art’s performance against other asset classes. |
If you don’t rely on Masterworks secondary market, it could take them between 3-10 years to sell a painting |
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Masterworks pre-vets artists and artwork |
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It is free to become a member |
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Now supports a mobile app |
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One reason why Masterworks could be an attractive income producing asset for many is that it offers the investor the opportunity to diversify their assets through artwork.
Artwork is a hedge against inflation and stock market volatility.
As an example, below is a graph illustrating the consistent increase in value with the contemporary art index versus the interest rate environment over the past 2 decades:
The art index (green) continues increasing – which means more money in your pocket.
The interest rates (red) keep decreasing – which means less money in your pocket.
If you’re already invested in the stock market, then you may want to branch out and consider other investment options to diversify your portfolio.
Below is an overview for Masterworks that you should know about before reading further:
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Art Investment Options |
⭐️⭐️⭐️⭐️⭐️ |
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Usability |
⭐️⭐️⭐️⭐️⭐️ |
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Projected Profits |
⭐️⭐️⭐️⭐️⭐️ |
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Customer Service |
⭐️⭐️⭐️⭐️ |
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Liquidity |
⭐️⭐️⭐️ |
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Fees |
⭐️⭐️ |
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To give a little more detail on the reason for my ratings, take a look at my breakdown below:
- Art Investment Options – Masterworks io offers a wide variety of art investment options with works ranging from the famous street artist Banksy to historical legends such as Pablo Picasso
- Usability – The platform is extremely user friendly plus there is a Masterworks app that you can download on the App Store as well to access your investments
- Projected Profits – Art investments historically have not correlated with the stock market and that’s a good thing, especially with rising inflation and the market volatility
- Customer Service – Very friendly, very responsive, and you can simply call the customer service phone number and talk to an actual human!
- Liquidity – While you cannot simply press a button and “sell” your invested shares as you could in the stock market, you can go to Masterworks’ secondary market. The secondary market offers some liquidity but not as much as the regular stock market
- Fees – Unfortunately, the fees do tend to be quite high (read more in the “Fees” section), at least when compared to investing in low-cost index funds, for example
Masterworks Customer Service Review
There are two ways you can have your questions for Masterworks answered:
- By Email
- By Phone
The good news is that you at least have the chance to speak to someone live – not just reach out to the team using email or instant chat.
However, to make sure you get the full picture, you should either check out the BBB (Better Business Bureau) or TrustPilot.com.
In March 2022, Masterworks received an A+ rating and accreditation from the Better Business Bureau.
Additionally, I did take a peek at the TrustPilot website, and have some information for you below:
While there are only 6 reviews, it appears that the average rating is just under 3 out of 5 stars – so one could assume that the Masterworks customer service is average.
That being said, I still think it’s important to read the reviews – both good and bad – to make sure you know what an experience with Masterworks could look like for you in the future.
Common complaints include:
- Customer service not responding
- Money transfers do not appear in a portfolio
- Too many phone calls and emails (from customer service)
- Customer service representatives not showing up for the phone interview
Chances are, these complaints are one-offs since there were only 4 one-star complaints (out of 6 total reviews) over the past 4 years since Masterworks has been active.
Take this information with a grain of salt.
About Masterworks Investment Platform
If you’ve ever seen a Monet, Da Vinci, Andy Warhol, or Banksy painting, you may have wondered how much money those pieces of art would cost.
The answer is probably in the millions – if not in the tens of millions.
Thanks to Masterworks, based out of New York, virtually anyone can now have access to the exclusive and high-roller art investing world.
Masterworks is the disrupter, being one of the first platforms to pioneer what is known as fractional art investing.
Once the artwork is sold (by Masterworks), the investor receives a profit proportionate to the amount invested in the artwork.
Below are some famous artists Masterworks currently invests in:
- Banksy
- Zao Wou-Ki
- Jean-Michael Basquiat
Below are some examples of the works of art Masterworks is investing in.
As the investor, “all” you have to do is invest your money in the artwork that you feel will bring you the highest return.
Masterworks does the rest of the work – the analysis, the artist pre-vetting process, the storage, the insuring of the artwork, and ultimately the sale process as well.
It must be said that Masterworks claims to have a rigorous diligence process, with only 1.8% of artworks passing their tests.
Below is a breakdown of how much works goes into the fine art investing world (it shocked me to see how many artists were analyzed versus the actual number of artworks that were purchased).
After the Masterworks team analyzes artists and paintings, the team purchases a select number of artworks to be held at the Masterworks secure facility for up to 10 years before the artwork is sold for a profit.
The artists that Masterworks selects have typically shown an above-average historical appreciation (with returns typically higher than the average returns of the stock market, which range at around 7% to 10%).
The historical returns for most of the Masterworks artists range between 12.70% to 19.80% – which is just about double to triple the returns you often see in the stock market.
My representative and I had a long discussion about how Masterworks was one of the trailblazers when it comes to investing in female minority artists (aka female artists of color or other underrepresented artists).
How Does Masterworks Work?
Masterworks gives everyone the chance to buy fine art by allowing virtually anyone to invest in shares of blue-chip artwork.
All you do is invest your money and wait for a paycheck in the mail that’s hopefully bigger than the amount you invested.
Here’s an outline of how Masterworks actually works:
- Analyze – Determine the most profitable artists
- Buy – Purchase the highest return potential artwork with the lowest price
- SEC Approval – Artwork is qualified with the SEC
- Invest – Investors are now allowed to invest in the artwork
- Storage – Artwork is held and insured at a secure location
- Holding Period – Average holding period lasts between 3 to 10 years
- Sale – Artwork is sold and you receive profits proportionate to the shares you own
As you can see, there are many steps involved with owning fine art, and Masterworks really does the grunt work for you.
The main downside here (which I’ll explore further in the “fees” section of this article) is that Masterworks charges pretty hefty fees (similar to a hedge fund) where they take 20% of any profits upfront on top of your annual fee.
Nevertheless, when Masterworks sells an artwork, your expected profit could be pretty high.
In other words, you don’t technically have to wait the full 3 to 10 years before Masterworks sells the artwork for a profit.
Masterworks: The Secondary Market
Do you want to sell your Masterworks shares because you’re sick of waiting for them to sell the painting and give you your cut?
There is a potential solution – and it’s called the secondary market.
I should note the secondary market is strictly peer-to-peer.
That means you’ll only be able to buy/sell your Masterworks shares to other Masterworks investors (so your pool of potential candidates is very small).
Typically, the only reason you would want to resort to the secondary market is that you’re looking for liquidity (aka you need the cash) before the painting itself is sold.
I should note that selling your shares is not guaranteed – even on the secondary market.
As my Masterworks representative said to me, “the secondary market is an escape hatch, it’s not a front door.”
Masterworks: The Phone Interview
In order to activate your Masterworks account, you do need to schedule a phone interview (which typically lasts between 15 to 20 minutes).
I scheduled my phone interview within 2 days of setting up my Masterworks account – so time-wise, I was pretty lucky to land a spot right away.
Here’s what the phone interview is really for:
- KYC
- Suitability
- First transaction
…And here’s what all of this means in plain English:
- KYC – “Know Your Client” – discussion of your financial profile (how much money are you able to invest, when you want to invest, your profession, etc.)
- Suitability – Match Masterworks’ minimum investment to your investment profile
- First Transaction – It sounds like the phone interview is used to help walk you through your first investment purchase
Masterworks Fractional Share Investing: Explained
Investing in fractional art shares is revolutionary – it’s new, it’s disruptive, and it could be pretty profitable.
Here’s a quick overview of how investing in fractional shares with Masterworks…works:
- Artwork is bought
- Masterworks files the artwork with the SEC
- Masterworks creates an LLC for each artwork purchased
- You can buy $20 shares of ownership for each LLC, until all shares are bought
- The artwork is kept for up to 10 years before it is sold
- Masterworks sells the artwork, dissolves the LLC, fees are paid, and proceeds are distributed to the investors
Keep in mind that because you’re technically a part-owner of an LLC, you should expect to receive a tax form that’s called a K-1 at the end of each tax year to file with your tax returns.
Masterworks Usability & Interface
Here’s what I love (and appreciate) about Masterworks:
- Anyone can invest
- Easy to link your bank account
- The website platform is easy to use
- Easily accessible Masterworks funding calculators
The major con when it comes to signing up to Masterworks is that you will have to undergo a phone interview (which takes about 15 minutes).
The platform itself is a simple design with an interface that’s fairly intuitive and that can help you find some paintings you may want to invest your money in.
Masterworks Features
Masterworks is a user-friendly “blue-chip” fine art investing platform that gives the average Joe the chance to invest in million-dollar-artwork at a fraction of the cost.
If your portfolio is already diversified in the stock market and you want to find alternative investments to protect yourself against stock market volatility and inflation, Masterworks could be the right next choice for you.
| Masterworks Features | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Minimum Needed to Open Account |
$0 |
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Minimum Needed to Start Investing |
Depends on your situation (that’s why you have the phone interview to go through how much you can afford to invest) |
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Investment Fees |
1.5% per year + 20% of artwork sale |
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Secondary Market? |
Yes |
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Holding Period |
3 to 10 years |
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Investment Options |
“Blue Chip” fine art – with values typically between $1 million to $30 million |
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Investment Returns |
9% to 39% |
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Year Founded |
2017 |
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Assets Under Management |
$650+ million |
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Current Users (as of November 2022) |
550,000 |
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Fractional Investing Available? |
Yes |
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Available Platforms |
Desktop and mobile app |
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Are your assets insured? |
Yes – Masterworks stores and insures paintings in a secure New York facility |
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Customer Service |
By Phone: 205-518-5172 Monday to Friday from 9am to 6pm EST |
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Country Availability |
U.S. residents and non-U.S. residents can invest |
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Masterworks still approaches art investing with an air of exclusivity, since you technically have to be “invited” to join the art investing world by completing a phone interview.
My representative told me about this statistic, and I was impressed, to be honest.
Masterworks Sign-up Process [Step-by-Step Guide]
Are you ready to start investing in art?
I’m going to take you through my step-by-step guide on how to sign-up for your Masterworks account today.
First, head to the Masterworks website.
Next, you’ll want to click on the blue button, “Request Invitation.”
Here, you’ll have to complete the information to apply for your membership.
After you’ve input your information, you’ll want to click “request invitation.”
Next, Masterworks will send you an email to verify your information.
Make sure to click on the “Confirm Email” link to verify your account.
Next, you’ll be sent to this homepage for Masterworks investors.
To complete the Masterworks sign-up process, you’ll need to answer a few of the questions on this Investor Profile page and then hit “finish.”
Note that with each investment input, the calculator to the right of the screenshot above (aka Masterworks Hypothetical Gross Value in 7 Years) spits out a number for how much return on your investment you could expect.
Here’s an example for $1,000:
So, if you invest $1,000 with Masterworks, you could see a potential return of just over $2,500 in 7 years.
Once you’ve mentioned how much you plan to invest, click the “finish” button.
It looks like I was one of the lucky members who were able to skip the waitlist and am ready to schedule my phone interview to join the Masterworks community.
Masterworks uses Calendly to schedule appointments, so you can select which date works best for your schedule.
The phone interview is about 15 minutes, and it looks like the Masterworks schedule is pretty flexible – at least they were for me!
From there, you’ll have to select whether you’re a/an:
- Other
- Family office
- Financial advisor
- Art dealer/advisor
- Individual investor
- Existing art collector
- Institutional investor
Once you’ve selected your fit, next you click finish and you can start linking your bank account to Masterworks using a secure system known as Plaid.
It literally takes a few minutes to link your account before you’re all set up.
Next, you can start browsing which offerings are open for investment – and simply take some time to browse their website.
To start browsing, click on the tab at the top of the website, labeled “Offerings,” and you can scroll through the available offerings.
Here’s an example of the paintings you could invest in with Masterworks – ranging up to $24 million in market value (imagine hearing yourself say that you’re a part investor in a $24 million+ painting!).
As of August 2021, Masterworks only offers 3 paintings for investing.
If you want to learn more about the painting offered, click on the tab (bottom, right) that reads “Deal Sheet.”
I just downloaded a 5-page research document detailing all necessary facts for me to better understand a painting by Jean-Michel Basquiat, which I could invest in through Masterworks (this is the $24 million painting).
The Deal Sheet reviews the following:
- The life of the artist
- Auction results for similar paintings
- The potential future returns of the painting
The investor (aka you and me) gets a lot of data and information about the potential painting so you can make an informed investing decision.
I like that.
If you want to learn more about the historical prices of paintings created by specific artists, you can always elect to click on the top tab that says “Price Database.”
Here you can always do some additional digging and research, depending on how interested and involved you want to be when it comes to investing in art.
If you want to learn more about the historical trading numbers for artists and paintings, click on the “Trading” tab at the top.
I love getting an overview of how each painting has performed historically speaking – and Masterworks gives you this data with the click of a button.
You can also buy and/or sell painting shares under the “Trading” tab, as shown above.
However, if you want to buy/sell shares (which would happen on the secondary market), you would first have to create an account through “Evolve.”
Note that only US investors would be available to buy/sell shares using Evolve.
You would also have to link your bank account with Evolve so that you can start buying/selling shares on the secondary market.
At this point, you should be ready to start investing in the art world.
Masterworks Fees and Pricing
Let me be upfront about the Masterworks fees and pricing: The fees are a bit high and they may be a little complex.
Basically, the Masterworks fees operate very similarly to how fancy hedge funds operate:
- An annual management fee is charged (1.5%)
- Masterworks takes a flat 20% commission once the artwork sells
- Whatever money is leftover, is then redistributed to the investors (you and me)
Here’s what you can expect when you invest in Masterworks:
| Masterworks Fees & Pricing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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What You’re Investing In |
Fine art |
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How You Invest |
Shares of artwork |
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Minimum Investment |
Typically varies based on the cost of the artwork and your overall financial picture |
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Typical Holding Period |
3 to 10 years |
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Annual Management Fee |
1.5% |
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Annual Management Fee is Used For |
- Insurance |
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Where the Artwork is Sold |
- Auction house |
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Masterworks Fee Upon Artwork Sale |
20% flat commission (similar to hedge funds) |
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How the Investor is Paid Back |
- Initial investment |
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Masterworks typically keeps a piece of art between 3 to 10 years.
If Masterworks is unsuccessful in selling the painting to individual investors for a reasonable profit by year 7, then Masterworks reconsiders its strategy.
By year 7, Masterworks then considers selling the artwork at auction houses, where there is a higher chance to sell the painting and pay back the investors (aka you and me) their initial investment + any profits.
In other words, if Masterworks decides to sell the artwork at an auction house, your net profit (aka the amount of money you actually take home) shrinks – but you could still make a profit.
Masterworks Education on Fine Art
Do you want to diversify your investment portfolio with fine art pieces but really don’t know much about the art world?
You’re not alone (I’m right there with you!).
Masterworks realizes that most potential investors may not have a solid background when it comes to art – and the platform has found a solution for art newbies like me with their educational resources.
Take the anonymous British street artist Banksy, for example:
Masterworks shares a bio about Banksy, and then shares several of Banksy’s paintings – and for how much they have sold in the past.
Here’s a list of the additional educational resources Masterworks offers its investors:
| Educational Resource | Description |
|---|---|
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Artist Biographies |
Better understand the creator behind the artwork by clicking on the “Further Reading” section |
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Price Database |
Database featuring paintings from each artist with the returns of each artwork |
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Masterworks Insights |
Thoroughly researched and information-driven articles that provide investors with insight into the art investing world |
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Deal Sheets |
Next to every painting available for investment, Masterworks provides what is known as a “Deal Sheet” for the investor to review the artist, painting specs, etc. |
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Research Reports & Data |
Reports covering the macro level of art investing, including the wellbeing of the art economy, historical auction data, and other art world trends |
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Candid FAQs |
Masterworks offers candid FAQs, where the platform lays out the pros and cons of investing in artwork |
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Customer Service Representative |
Keep in mind you have your own dedicated customer service representative, who can also help direct you to additional resources, should you have any questions |
As you can see, Masterworks certainly doesn’t keep the customer in the dark.
Granted, some of the research articles and data are pretty dry and boring, but if you’re wondering how (and where) your hard-earned money is going, I would definitely recommend you to do your research first.
What Artwork Does Masterworks Offer Investors?
As a Masterworks investor, you can invest in a lot of different pieces of artwork – many of which typically cost between $1 million to $30 million (or more!).
The trick to becoming a successful art investor is to not allow your emotions (aka whether you like a piece of art or whether you hate it) to come in the way of your investments.
Investing should be a rational and analytical process.
Not an emotional one.
And that’s why Masterworks partners with analysts from well-known firms like Citi to perform deep-dives into each proposed artwork and artist before actually investing in art.
Here’s a little more insight:
| Masterworks Investing Insight | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Masterworks Invests in |
Blue Chip artwork |
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Artist Examples |
- Banksy |
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Percent of Art That Passes the Masterworks Diligence Process |
1.8% |
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Can you sell your shares before the artwork is sold by Masterworks? |
Yes (on the Masterworks secondary market) |
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The good news is that even if you’re not well versed when it comes to art investing, you can rely on the Masterworks team of analysts to make an informed and relatively calculated decision to help your investment earn money in the long run.
Just remember to never invest more than what you are comfortable losing.
Is Masterworks Worth It?
The answer is not as straightforward as I wish it could be.
Masterworks could be worth your time and money if you:
- Don’t have high-interest debt
- Are ready to invest in artwork
- Want to protect yourself against inflation
- Want to diversify your investment portfolio
- Want to earn potential returns between 9% to 39%
- Want to protect yourself against stock market volatility
- Don’t mind having your money locked up for 3 to 10 years
- Want to invest in something that isn’t correlated with the stock market
If you feel like these points are you, then Masterworks could very likely be one of the best investment platforms for you.
Especially if you’re already investing in the stock market, then you may want to protect your money against stock market volatility.
Analysts from Citi determined that the correlation between contemporary art and the stock market is about -0.04, which is a very low level of correlation (i.e., a low correlation is good, especially during a recession).
You can also earn some serious money by investing in art.
In fact, the chart below reveals how the annualized performance of contemporary art investments was better than the annualized performance of the S&P 500 (which is the 500 largest companies of the US):
Between 1995 and 2020, contemporary art investments returned around 14% while the S&P 500 (and I’m a huge fan of the S&P 500) returned about 5% less, at 9.5%.
Now I’m not saying stop investing in the stock market and dump your money into the art market to get higher returns. That would be a bad idea, especially because the art world is unregulated, it’s risky, and your money is tied up often for multiple years at a time.
But, I am saying that investing in art is a potentially lucrative idea.
Just remember to do your research first, before you commit financially.
Who Should Use Masterworks?
While the concept of investing in fine art might be novel – and exciting – it’s important not to get carried away and invest your life’s savings with Masterworks.
Below is a list to show you who may want to consider using Masterworks:
- You’re looking to diversify your portfolio
- You’re already invested in the stock market
- You want to protect yourself against inflation
- You are looking to earn returns between 9 to 39%
- You don’t mind locking your money up for 3 to 10 years
- You want to protect yourself against stock market volatility
Remember that investing in art may not be the right next move for you – but it’s still important to stay informed of your options.
Masterworks Alternatives
Not sure if investing in fine art is the right next step for you?
Here are a few more lucrative investments:
Just remember to do your research – no matter the investment type – before you commit financially.
Masterworks Review Verdict
Not many people can say they are “blue chip” art investors – in fact, it’s typically only the top 1% who can boast about their latest art investments.
Not anymore.
Masterworks is the art investing platform we’ve all been waiting for.
Now, you and I can invest in million-dollar-artworks for a fraction of the price.
Here’s how you use Masterworks:
- Sign-up to Masterworks
- Complete the phone interview
- Meet your dedicated sales rep
- Start making your fine art investments
While all of this sounds just dandy, keep in mind that Masterworks does charge fees in line with hedge funds.
However, the interface and user experience itself (in my opinion) makes up for the complexity in the fee structure, because it’s very easy to navigate your Masterworks portal.
I encourage you only to invest as much as you are comfortable losing since the art world is still speculative, unregulated, and illiquid.
Masterworks: FAQs
Is Masterworks legit?
Masterworks is a legitimate alternative investment platform that gives everyone access to invest in million-dollar artwork at a fraction of the cost. While there certainly is a potential for profit, it is important to realize that art is a risky investment.
Is Masterworks a good investment?
Masterworks could be a good investment, as long as you’re comfortable taking some risk in the unregulated world of art. Fine art is a great way to diversify and hedge (aka protect yourself) against inflation risk and stock market volatility. However, art investing comes with long lock-up periods, so it’s important to weigh the pros with the cons.
How much does it cost to join Masterworks?
It is free to become a member at Masterworks. If you invest in a painting, you will be charged an annual management fee of 1.5% and 20% of the profits from the sale.
Is Masterworks worth investing in?
It could make sense to invest in Masterworks if you are in need of diversifying your investment portfolio, want to invest in something that serves as a potential hedge against inflation, and if you are comfortable losing the money that you invested in Masterworks (i.e., don’t invest your life savings in Masterworks).
How much should I invest in Masterworks?
Investing in fine art has been a pastime for the high roller world. Not anymore. Masterworks is a blue-chip art investing platform that gives the average person a chance to invest (starting with a minimum investment of $500 in $20 increments).
Can you make money on Masterworks?
Yes, you can make money on Masterworks – but only after you’ve completed a certain holding period (which typically is 3 to 7 years). Masterworks sells the blue-chip paintings, and any profits that were made from the sale are divided up among the painting’s investors (like you). The profits are proportionate to the number of shares you held in that painting.
Can you reinvest your profits with Masterworks?
Yes, you can reinvest your profits in blue chip fine art that is offered through Masterworks.
If you prefer to keep your cash and not reinvest, you can also ask Masterworks to send your profits directly to your bank account.
Masterworks Review 2023: The Bottom Line
Masterworks makes it possible for almost anyone to start investing in blue-chip art worth up to $30 million+.
Instead of buying the full artwork, you (the investor) buys shares of the artwork, in $20 increments.
Keep in mind, the minimum investment depends on your financial situation (this is why you have a phone interview with Masterworks first, before investing).
While you can certainly make money investing with Masterworks, it’s important to recognize that there are risks involved when investing in art, some of which include:
- High costs and fees
- Long lock-up periods
- Unregulated industry
It’s so critical that you are cautious with how much money you invest in Masterworks – make sure that whatever you invest, you are OK losing (worst case scenario).
Think about your options today, because your bank accounts will thank me tomorrow.
Now it’s your turn:
What are your thoughts on Masterworks?
Let me know the comments below.
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59 thoughts on “Masterworks Review 2023: Is it Legit? And is there a Catch?”
Thank you for your extremely thorough and very helpful review of Masterworks. I just found out about them and have my interview next week. Your article gave me the information I needed to feel confident about starting a membership with them.
Hi Beth,
Thank you so much for your kind words!
I’m so glad to hear that you found this review helpful 🙂
It’s an interesting platform with a revolutionary concept!
Good luck!
Fiona
Hey Fiona
Your writings are great: cogent, strategically repetitive (repetitive on important points), light and high-yield.
Cheers
Lawrence
Canada
Hi Lawrence,
Thank you so much – I’m really glad you enjoyed the article 🙂
Good luck with your future ventures!
Cheers,
Fiona
Very helpful and encouraging. May be exactly what I have been looking for.
Michael,
Thank you so much – I’m glad to hear you enjoyed the article!
Masterworks is definitely an interesting and newer concept for investors.
Good luck on your future ventures,
Fiona
I thank you for the in depth review of Masterworks.
Hi Ronald,
Thank you so much for your kind words!
I’m glad to hear that you found this article helpful 🙂
Cheers,
Fiona
Couldn’t have written it better meself, thanks.
Rick
Hi Rick,
Thank you so much for your kind words!
I appreciate it 🙂
Fiona
Your analysis above is good, thorough and squares with what I learned and understand about Masterworks pros and cons.
This is an interesting diversification play. Fractional ownership is the only way I will ever get to “own” a Banksy or Basquiat and participate in the high-end art markets. I’ve now had 2 conversations with their rep, and am deciding whether to move forward. I never felt the rep was pushy, and found him to be patient and courteous with all my questions.
My advisor says he has other clients invested in Masterworks and did not put me off. He also said, don’t invest any more than 1-3% of total net worth here. Of course that’s his advice to me, and may not be relevant to anyone else’s situation or appetites.
Hi Liam,
Thank you so much for your kind words!
I’m glad the analysis provided you with some value. And just like you, I think the only way for me to own one of those famous paintings is through fractional ownership. Thanks for sharing your insight – that your rep wasn’t pushy and that he was patient with your questions. Good luck!
Cheers,
Fiona
Thanks for this comprehensive & unbiased review, Fiona. Very helpful. While my rep was not overly pushy, but he did try to upsell by saying that the minimum amount they allow to invest is $15K, which I now find is untrue.
You’re welcome, Rohit!
Thank you so much for sharing your experience, my readers will take a lot of value from this.
If you decide to move forward with Masterworks, feel free to keep us updated on your journey 🙂
Cheers,
Fiona
Thanks for your detailed explanation of workings of Masterworks. Plan to do more research before moving forward!
Hi Ananth!
Thank you so much for your kind words – I’m so glad you enjoyed the article 🙂
Fiona
Thanks for the detailed article.
I’m very interested in this platform, however I’m curious about a couple more things:
The subscriber agreement says:
Subscriber acknowledges that the price of the Shares was set by the Company on the basis of dividing (X) the sum of (i) the purchase price that a Masterworks affiliate paid for the Painting, plus (ii) 11% of such amount by (Y) the number of shares offered in the Offering. The net proceeds of the Offering together with any unsold shares, if any, will be paid to Masterworks to acquire the Painting from an affiliated entity.
I’m curious if you know what that 11% is up front, are investors essentially starting 11% down? Is this a standard level of fees for buying a painting? (I’m aware auction houses take a large cut). I’m mostly curious if masterworks pockets that 11% and thus would be making a lot of money regardless of painting appreciation, or if that fee is going towards the purchase outside the company.
Another note is that investing outside of the USA e.g. from the UK where I live, exchange rate fees come into play for wire transfer which in my case is around 3.5% which is another cut from profits to start with and consider.
Thanks again!
Hi David, That’s a very good point about the wire transfer fee, especially for those folks who are located in different countries. As it relates to your subscriber agreement question, I think this would be a great question to ask the customer service team over at Masterworks. They will likely give more customized information – specifically based on the painting(s) that you’re considering investing in.
However, from what I was able to find out, it does look like there is an 11% markup fee. In other words, if Masterworks purchases a painting for $100 (a cheap painting!), then it would list the painting for investors like you and me at an 11% markup, so theoretically it would be listed at $111, at which point you and other investors can purchase the shares. That’s just how I interpret how this process works. Hopefully this helps!
Yes Masterworks take an 11% mark up – their customers buy at the price Masterworks paid + 11%
Hi George, it is also my understanding that there is an 11% markup.
Hi David,
Per the offering details that 11% “is intended to be reasonable compensation for Masterworks’ services, capital commitment and outlay in sourcing and acquiring the Painting.”
So basically yes investors start 11% down. That’s another commission for Masterworks. Obviously these guys are not here for charity, they would still make money if the painting is sold for the same price or even for less in that 11% margin.
Regarding the fees from outside the US, I used Wise (ex Transferwise) and only had to pay 4.23€ total.
I am in Spain and just purchased some shares for a Banksy and my experience is totally different to what most people are saying. I opened an account and could buy shares straight away, no interview… I guess there are no interviews for foreigners (language and time difference conflicts maybe?)
Although the offering details say: ” the minimum investment amount per investor is $15,000 (750 Class A shares), however, we can waive the maximum or minimum purchase restriction on a case-by-case basis in our sole discretion”
I guess I am lucky to be one of the chosen ones that could buy only 25 shares (500$)… I guess they have issues finding people able to invest 15000$ and have probably open the market for anyone willing to invest. or again they let the tap open for people outside the US.
Hope this helps other people
Wow. Great article. More info than I could’ve hoped for. I didn’t see this in your article, but can you just reinvest your profits directly, or do they send them to you and it’s up to you to do so? I’m quite a novice investor, but if I did this I’d be in it for the long haul.
Hi Matt,
Thank you so much for your kind words – I’m so glad you enjoyed the article!
Based on everything I read, I would likely say that you have the choice to reinvest your profits (after Masterworks sells the painting for a profit or after you sell your shares on the secondary market) or to withdraw your profits. I’d probably suggest you also reach out to your customer service representative so that you receive more customized information (based on the painting you are looking to invest in). You’re absolutely right, however, because an investment like Masterworks is definitely for the long term so selling your shares in a short period of time (ie, a few years) probably won’t be in your best interest.
Good luck on your ventures!
Fiona
The article you wrote was fascinating. I enjoyed this easy read. I enjoyed the facts. I enjoyed knowing the risks. My question is that after they pay you, can you decide to just flip the money back into another piece of blue chip art? Thank you so much for your incredible research!
Hi Frank,
Thank you so much for your kind words – I’m so glad you enjoyed this article! Based on everything I read, it looks like after you earn your profits, you could invest in other fine art or withdraw your profits. However, I would suggest you reach out to your customer service representative directly and ask them this question as well, so that they can customize the information for you (based on the painting(s) you are considering investing in).
Good luck on your ventures!
Fiona
Thanks for the write up! You provided a ton of good information here and I signed up last week.
When the salesperson called for my “membership interview”, he told me the same thing as Rohit, that the minimum investment was $15k. That didn’t seem right based on my research, so I didn’t feel comfortable pulling the trigger. Thankfully the salesperson was not pushy and happily accepted my response not to invest at this time.
A friend of mine who had invested a few days earlier knew I was having my membership interview and asked me later that day if I invested. Guess what? The minimum investment they told him was $10k. It was at that point I realized they lied to me and it was just a sleazy sales technique to get more money. Maybe it is a coincidence, but in both cases the minimums we were told were exactly 1% of our total portfolio values. So, you’ll see that it’s not that I couldn’t afford $15k, it’s that the minimum set off alarms in my head based on my research. Learning that they lied to me left a very bad taste in my mouth and now I wouldn’t trust them with a dollar.
I wanted to share this info so other potential investors know a little more about what they’re getting into — if they still want to invest they at least know they can go as low as $10k (and maybe lower).
Hi Darcy,
Thank you so much for your kind words – I’m so glad you enjoyed the article!
I appreciate you sharing your experience and story here so that other readers can also learn more. One thing I would note is that it appears Masterworks looks at your overall financial profile and then typically determines your minimum investment. In other words, the minimum investment may be more or less for some folks based on their overall financial picture. If you have any further experiences to share, I’d love for you to comment 🙂
Good luck on your ventures!
Fiona
Shouldn’t a minimum investment have nothing to do with my overall financial profile? Just because a person has more money to invest shouldn’t mean they HAVE TO. What are your thoughts?
Hi Joann, Thanks for your comment! I think you make a good point – it can certainly be a little confusing when it comes to consistency since it appears that the minimums are different depending on your financial picture – and it also typically depends on the value of the artwork you are investing in. Hopefully this helps!
I am a member and investor of Masterworks Arts from Canada. The minimum investment for an art piece is $500. You are not obligated to agree to any random amount. They ask all kinds of questions to figure out an amount. Typical salesperson tactics. BE FIRM & DECISIVE on the amount you want to invest. I am dinked with a fee of USD 38 every time I invest a USD 1000 on an art piece. This in my opinion is quite unreasonable considering I even use a USD card. If you are a US person, they provide a Masterworks Wallet where you do not have to pay any fees. It seems they don’t care to provide something similar for us across the border. Secondary Market Offering is also available only to US citizens. Otherwise, if you are an art enthusiast like me and want to be a part-owner of some of the most expensive contemporary art of our times, this is the way to go. They complete appraisals every year and I am very happy with the way my investments in arts by Jean Basquiat, Warhol, Gerhard Richter, Banksy, etc are going. Way better than the stomach churning volatility of S&P500 for sure.
Thank you so much for your input – I think your feedback adds a lot of value here. It certainly sounds like Masterworks isn’t the friendliest when it comes to international fees. On the bright side, however, at least Masterworks gives international investors the opportunity to invest (and there are several alternative investments that do not offer this option). I also 100% agree to be firm and not let yourself be pushed around by the salespeople. Thanks for sharing!
Thanks Fiona the was helpful analysis
definitely will sign up for the list
hope you accept male members
Best Regards,
Hi Khalid,
Thank you so much for your kind words! Glad you enjoyed it 🙂
Cheers,
Fiona
Fiona!
I couldn’t find anyone writing about this and I was really wanting to dip my toes into blue chip art investing. I really really appreciate your thorough research and genuineness throughout your piece. I feel more confident and like you really have your readers backs.
Just also read you started a nonprofit for financial literacy, what a rockstar!
Excited to read more of your unbiased and truly helpful pieces.
Hi Christie,
Thank you so much for your kind words – I am so glad this article helped!
I’ll keep the unbiased articles coming 🙂
Good luck!
Fiona
Thanks Fiona
Your in depth analysis was very revealing.
I like the concept of Masterworks but not the idea of revealing too much personal information to them. If one wants to buy gold, bitcoin, stock, etc. they can simply purchase it, deciding for themselves how little or how much they want to invest, accepting the fact there can be minimums required.
It was fortunate that I read your review prior to contacting them.
I’m not sold yet, but am considering. My background has been the art world, and I have seen the highs and speculative lows over the years.
Thanks
Joe
Hi Joe,
Thank you so much for your kind words!
I’m glad to see that you found this review helpful – and absolutely, I can completely understand that giving out so much personal information could be a negative. Personally speaking, I’m also a bit skeptical about giving out so many details.
Cheers,
Fiona
What exactly is this 1.5% fix fee a year? on what? on the art you invest or on the money in the Masterworks account? I hope is on the investment.
So, if the fixed fee is on the piece of art, on an investment of $100 do I have to pay $1.5 every year? in 10 years it’s $15, which is 15% of my principal.
Hi Gaf,
That’s a great question.
From my understanding, you are right in that Masterworks would charge a 1.5% annual fixed fee on just your shares and not the cash that’s in your Masterworks account. The 1.5% fee will also not be withdrawn from any cash in your Masterworks account. Rather, Masterworks will take the 1.5% in fees from your shares. Hopefully this helps.
Well written article, but I would question the data provided by Masterworks. The historical performance of the “art” index looks attractive but doesn’t match other research and the way they sold that one and only painting that allows them to advertise a high return looks ‘curious’🚩.
Hi George,
I’m glad you bring this up. I cannot emphasize enough how important it is for everyone to do their own due diligence and outside research before financially committing – to any investment.
Independent, third-party data certainly helps me when making investment decisions as well.
Thanks again for sharing!
Fiona
I’m bookmarking you! I’m not a Millenial but a Gen-Xer (cooler name I have to say)..but I just had my interview prior to doing my official research. You had the best review out there. I have only read 2/3ish but it’s extremely detailed and very informative!
Thank you so much – Millenial!
Hello Nancy!
Thank you so much for your kind words 🙂 And Gen-Xer is a pretty cool name, I’ll admit it!
So glad to hear that my review was able to help you and add value.
Cheers!
Fiona
Thank you for this article. It was very informative. Much more informative than the guy with whom I did my interview with. I actually thought that the interview was to help me understand the Masterworks model and decide whether it was a good investment for me and possibly how to use it. Nope it felt more like a job interview and when I wouldn’t tell him how much liquidity I had immediately, he abruptly ended the call after 10 minutes saying that he couldn’t help me. Your assessment of holding this out as an elite membership was spot on. I was sent a follow up email stating” I understand you are not looking to get started right away, so your membership will remain pending for now as it is reserved for active investors”. Then he included four deal sheets on current offerings and instructed me to contact him if I would like to invest in one. Maybe art investors are different, but if someone with a title of Vice President Membership acted like this to potential investors in a real estate deal, they wouldn’t have a business.
Hi Angel,
Thank you so much for your kind words – I’m glad to hear that my article helped fill in some of the gaps. — And I’m sorry to hear that you didn’t have the best experience when it came to your phone interview. I’ll admit that my phone interview, although my representative was very informative and knowledgeable about the platform – did seem a little pushy and he was fairly eager to have me invest. It seems like the phone interview experience really depends on the customer service representative that you are paired with. Thanks again for your input and good luck!
Cheers,
Fiona
Thank you for your insight regarding Masterworks. I was skeptical at first but now I feel confident with investing with them.
Hi Tod,
Thank you so much for your kind words!
I’m glad the blog post could help 🙂
Cheers,
Fiona
Thanks Fiona,
Great analysis and lots deep dive details.
Question ,
What is % shown next to the particular artwork, for instance some are listed at 90%, does that mean the perceived value is almost achieved and art will be sold once at a 100% and if investing now you possibly wouldn’t have to wait 3-10 years?
Hello John,
Thank you so much for your kind words!
I’m glad to hear this article helped you 🙂
To my knowledge, I would say that if an investment shows 90%, then it is my understanding that this means the investment is almost fully invested (in other words, only 10% of the remaining shares remain for investors like yourself to invest). As it relates to the number of years you have to wait, I think that really depends on the investment type, so I would probably confirm those numbers in the prospectus as you sign up – or even call the Masterworks customer service number. Hopefully this information helps!
Cheers!
Fiona
Hi!
I loved your article. It was very thorough and I’m glad I read it before my interview.
After the interview and all my personal information was taken 🤨 , they gave me a $500 minimum investment per painting (ie. 25 shares). It was mentioned that anything below $500 wouldn’t really be worth it (pretty sure this is a sales tactic but whatever).
Thankfully, my representative wasn’t pushy; however, he did mention that my account can’t be approved until after my first transaction was done. So while I wasn’t pushed to purchase anything during the call, I will still have to hop back on another call to make that first transaction and become a member.
Hi Ella,
Thank you so much for sharing your experience with Masterworks!
I think this is so valuable, especially as other readers consider signing up to the platform as well. I’m really happy to hear that your representative was not pushy – personally speaking, that makes a big (and positive) difference to me. Hopefully, things go smoothly for you as you hop back on your second call.
Thanks again – and good luck as you start investing with Masterworks!
Fiona
My money is just sitting there..the painting did not sell 100% and I tried to sell my shares on their secondary market but no bites. So, didn’t work out for me.
Hi Deborah,
I’m sorry to hear that – and I appreciate you sharing your experience.
Would connecting with your customer service representative help or was this also a dead-end?
Wishing you luck in resolving this issue soon,
Fiona
Thank you so much for your well researched in depth article. I am based in the UK and found out about Masterworks through someone I follow through socials. Did my DD and signed up. No need for an interview possibly due being based outside US. I usually invest in SP500, property etc but had wanted another inflation protected investment so contemporary art seems to fit the bill. I know you cannot give financial advice but when doing your research for example Picasso at present has a “sharpe ratio” of less than one ie not overall a good investment and also the price appreciation is low for a Picasso compared to other artist ( almost half the value). BUT this is a Picasso. So how would you decide which piece of art to invest in? If you asked the man on the street what would you invest in a Picasso or a Ruscha I’m guessing the majority would go for the former but from the data provided the latter is more desirable.
I’m so glad this article was helpful – and thank you very much for sharing your thoughts on Masterworks as well 🙂
To be very honest, that’s a tough question. If I was in this situation, I’d probably take a closer look at the data to see what the long-term potential would be of the artwork and how that would factor into my overall financial plan. It might also be worth consulting with someone from Masterworks (perhaps you can give customer service a call to give you more direction?).
Hopefully this helps add a little bit of guidance to your question 🙂
Good luck – and cheers!
Fiona
WOW! This was the ONLY real article I could find on this company. Had my interview today, both gents were cool and easy going. I was never told there was a minimum, but what THEY considered to be a good investment in terms of return based on the percentage of my liquid assets. I put 10k on hold, spread across 3 artworks, but certainly glad I came across this article. MANY, MANY THANKS! I will still proceed to invest but I think I will stick to my original preferred investment of 5k-6k and see how it goes. Hopefully they will let me do that. Not very fond of the fees, as you outlined. Also they do highlight the amount of funds but as a stock and crypto investor, I need to stick to the amount of shares I want. Whew!! They almost got me! =) Back on track because of this article! I wish you much prosperity and happiness!!
Hi Jay,
Thank you so much for your kind words!
I really appreciate it – and I’m so glad to hear this article helped you!
Yes, the fees are one of the biggest drawbacks in my opinion to this investment platform. However, depending on the artwork, the returns could very well be worth the money.
Good luck with your art investing journey, and please let me know how it goes!
Cheers,
Fiona
I’m a UK resident interested in art investment
Is 20% commission an industry average for blue chip art fractional investment? Plus the 15% if the art is sold at an Auction House – 35% commission and fees seems like a lot considering I’m not able to invest large sums.
Newbie Art Investor from London
Hi there!
You are 100% right… the commission that the art world (and to be honest, many other non-traditional and illiquid investments) charge is typically between 15% to 25% if not more. Personally speaking, I think that is a lot of money paid on just commissions (especially seeing that index funds charge often less than 0.10%!). With that said, you can make a pretty hefty profit by investing in art and I know that Masterworks does do a pretty good job when it comes to vetting their artwork, so chances are that you may see some sort of gains. However, you are absolutely spot on when it comes to the commission charge. It is pricey and it can be a pretty big chunk of your money.
Hopefully this helps provide you with some guidance!
Good luck – and let me know what you decide to do.
Cheers,
Fiona