Risk reduction associated with art dealers and dealers in other commodities

摘要

A partnership between financial investors and dealers helps mitigate the risk associated with investing in commodities, such as emerging art, while allowing the dealers in the works of art to participate in the future appreciation of the artworks they sell. Investors invest money in a fund in exchange for financial instruments that entitle them to shares of the fund revenues. The fund acquires works of art from art dealers, who forego at least a portion of their profit from the immediate sale of the asset in return for a financial instrument that entitles them to a share of the funds revenues. Revenues are generated on behalf of the fund through commercialization of the works of art in the fund. Investors and dealers are entitled to a share of the revenues according to the terms of the financial instruments they receive. Because the dealers forego a portion of the their commission, the model can create an internal leverage by leveraging investors' money to but more works of art than otherwise would be possible. Both investors and dealers can profit from the future appreciation in value of the works of art (or other assets) as they are commercialized by the fund.