Masterworks Review 2024
Disclosure
Disclosure: This page may contain affiliate links. This means we earn a small commission (at no additional cost to you) if you purchase a product through our links.In a nutshell: Masterworks may have set out to democratize investment in fine art, but several shortcomings have come to light that potential investors cannot overlook.
The platform’s touted access to a diverse portfolio of acclaimed artworks is marred by a lack of liquidity and high fee structure. Its offerings pale in comparison to platforms like Yieldstreet, which provides a more comprehensive approach to alternative investments.
| Fees | Minimum Investment |
|---|---|
| 1.5% Per Year + 20% Of Profit | No Minimum |
- Offers access to invest in high-profile artworks.
- No minimum investment restrictions to start.
- Provides educational resources about art investment.
- Illiquidity of Investments: Masterworks' investments are notably illiquid. Selling shares on their secondary market is unreliable, leaving investors stuck until Masterworks decides to sell, which could take years.
- High Fee Structure: The 1.5% annual management fee and 20% profit sharing significantly eat into potential returns, making the investments less attractive compared to Yieldstreet's more transparent and lower fee structure.
- Limited Accessibility: The platform requires a phone interview, creating an unnecessary barrier to investment, unlike Yieldstreet, which allows investors to start more seamlessly.
- Restricted to U.S. Markets: Masterworks limits its secondary market to U.S. citizens with U.S.-based banks, excluding a large demographic of potential international investors.
- Opaque Valuation Process: The method by which artworks are valued is not transparent, raising questions about investment returns and share pricing.
- Potential for Conflict of Interest: Masterworks' dual role as both seller and market maker could pose conflicts of interest, unlike Yieldstreet, which offers clearer delineation between roles.
Compare to Other Investment Platforms
 Learn More |
| Fees1.5% Per Year + 20% Of Profit |
| Learn More |
| FeesFees are based on investment tier & range from 2.25% to 2.85%. |
| Learn More |
| Fees0-2% annual management fee |
Table of Contents
Masterworks’ Shortcomings Explained
Illiquidity of Investments
Masterworks advertises the ability to sell your shares on a secondary market, suggesting a level of liquidity that simply does not exist. This has led to frustration among users, who find themselves unable to cash out when needed. In contrast, Yieldstreet offers investments with clear terms and timelines, providing a more straightforward exit strategy for investors.
High Fee Structure
Masterworks’ high fees are a significant deterrent. The 1.5% management fee and 20% profit cut are steep compared to alternatives like Yieldstreet, which offers a more reasonable fee structure. These fees can significantly dilute the profits for Masterworks investors, making it a less attractive option for those looking to maximize their returns.
Limited Accessibility
The necessity of a phone interview before investing with Masterworks adds an unwelcome hurdle for many potential investors. This gatekeeping stands in stark contrast to Yieldstreet’s more open platform, which allows investors to begin investing without such preconditions.
Restricted to U.S. Markets
Masterworks’ services are only available to U.S. citizens with U.S.-based bank accounts, excluding a broad spectrum of global investors. This limitation is in direct contrast to Yieldstreet’s more inclusive platform, which caters to a wider audience.
Opaque Valuation Process
There’s a lack of clarity on how Masterworks values the pieces of art in its collection, leading to skepticism about the real worth of investors’ shares. Meanwhile, Yieldstreet’s transparency in asset-backed investments offers a clear understanding of how each asset is valued.
Potential for Conflict of Interest
Masterworks’ role in both acquiring the art and managing the market for shares may lead to a conflict of interest, a concern that Yieldstreet’s distinct and transparent investment approach manages to avoid.
What Customers Are Saying About Masterworks
1- “Terrible! Opened account for a couple of days, didn’t go through interviews etc and decided to close the account. Since then I am being harassed every day. I have 2 calls on my phone every single day. I emailed them complaining and asking them to remove all my data and haven’t received a response and the calls have not stopped. TERRIBLE!!!!”
2- “The staff are NOT knowledgeable about artwork AT ALL…during calls their main focus was my annual income and how much I would give them…they are just hard core cold callers. No matter my questions, it was all about my bank acct! INVESTORS BEWARE!!!”
3- “Absolutely horrible experience. LIES to get you to invest with them. LOSING money and what they promised did not come through. FINALLY no response to their emails. Once you invest in them you CANNOT get your money back.”
Yieldstreet as the Superior Alternative
Yieldstreet emerges as a superior alternative to Masterworks, offering a broader range of investment opportunities with clear, upfront terms, and a transparent fee structure. Its investments are backed by real assets, providing a tangible sense of security that the art investment world often lacks.
For those seeking a solid and dependable addition to their investment portfolio, Yieldstreet provides access to a world of opportunities beyond the volatile and opaque art market that Masterworks is confined to.
Read our full review of Yieldstreet here.
Final Thoughts
In the end, while Masterworks presents a novel concept, the reality of investing in fine art through their platform may not live up to the expectations set by its marketing. From the lack of true liquidity to the high fees and the barriers to entry, Masterworks’ investors face numerous challenges.
On the other hand, Yieldstreet offers a more investor-friendly platform, with a variety of alternative assets and a straightforward investment process. For those seeking to diversify into alternative investments, Yieldstreet stands out as a platform that aligns better with investor interests and offers a more transparent and potentially rewarding experience.
Ready to explore a reliable alternative to Masterworks? Click here to sign up for Yieldstreet and discover a diverse range of investment opportunities with clear benefits and straightforward terms.
Frequently Asked Questions
Masterworks offers a variety of investment options in fine art, focusing primarily on works by established and historically significant artists. The platform specializes in blue-chip art, which includes pieces by renowned artists such as Banksy, Basquiat, and Warhol, aiming to provide investments that have the potential for appreciation based on past market performance.
Masterworks earns through a combination of annual management fees and a share of the profits upon the sale of an artwork. Specifically, they charge a 1.5% management fee annually and take a 20% commission on profits, which contributes to the care, insurance, storage, and eventual sale of the artwork, as well as regulatory compliance and operational expenses.
Masterworks provides a secondary market platform where investors can list their shares for sale to other registered users, offering a degree of liquidity. However, there is no guarantee of a buyer, and Masterworks does not directly repurchase shares, meaning that investors may need to wait for another user to buy their shares or hold them until the artwork is sold.
Investing in art through Masterworks involves risks such as market volatility, illiquidity, and the potential for the value of art to decrease. The art market is subject to shifts in consumer preferences and economic conditions, and since art does not produce income, the investment is purely speculative, banking on the artwork appreciating over time.
Masterworks is primarily focused on the U.S. market and its secondary market platform is limited to U.S. citizens with U.S.-based bank accounts. International investors may be able to invest in initial offerings but should consult with Masterworks directly to understand any potential limitations or additional requirements based on their residency.
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