Masterworks Review 2023

What Is Masterworks?

Masterworks is a unique, alternative investment platform that allows you to purchase fractional shares in fine artwork. In addition to offering low investment requirements and accessible prices, Masterworks makes it relatively easy for investors to buy shares of contemporary artwork by well-known artists like Banksy and Basquiat.

According to a statement in The Wall Street Journal, the fine arts sector had an average return of 10.6% annually.

• Start investing with only $20.
• Want to liquidate before the sale of artwork? Masterworks has a plan, and you can sell and purchase your shares in the secondary market.

Get Started With Masterworks Today

How Masterworks Started

Scott Lynn founded Masterworks in 2017. Despite being a relatively new concept, Masterworks understands the importance of art needing to be a relatively safe investment.

That’s why they take extreme care with every investment opportunity presented and make sure every piece of art is insured and kept safe.

To date, Masterworks has more than 400,000 art investors signed up to their platform and launches a new high-end piece of artwork just about every week. Their propriety data to determine which artists’ market has more investment potential is what allows them to be so active.

Masterworks Investment Options

Once the Securities Exchange Commission (SEC) has approved a filing for an individual piece of artwork, Masterworks offers its members 90 days to purchase shares as a primary offering.

With no minimum investment, how many Masterworks shares you want to buy in the artwork is dependent on your risk tolerance and budget. Fractional shares tend to start at $20.

Once you have invested, you can expect Masterworks to hold onto that particular art piece for 3-10 years. This gives them enough time to find opportunities to sell to art collectors or the contemporary market.

Once the sale of the artwork is finalized, Masterworks will distribute all proceeds to investors/shareholders calculated based on the fractional ownership (number of shares held), minus their percentage of profit.

Can You Cash Out Early?

You can cash out your fractional shares at any time by selling them back to another user through the Masterworks marketplace. Prices for fractional share sales vary depending on demand from other Masterwork users.

Keep in mind though, there is no guarantee that there will be any interested buyers on the secondary market.

• There is no transaction fee for buying and selling shares through the Secondary market.
• Shares will be available for transactions 90 days after the closing of the offer.

It’s important to note that Masterwork’s secondary market is only open to U.S. citizens who have a bank account with a U.S.-based bank.

Masterworks Pricing & Fees

Masterworks are generous when it comes to trading fees and is very transparent with its pricing and fee structure.

You won’t be charged fees for the following:

• Your initial investment in the artwork
• Selling shares to another investor on the secondary market.

Masterworks charges two sets of fees for the following:

• A 1.5% annual management fee based on the total value of your account. Deducted from equity annually, diluting your shares. There is no option to pay the fee in cash.
• Masterworks will profit 20% from the sale of artwork to the open market. These fees contribute to managing artwork, storage, appraisals and insurance, and SEC regulatory fees.

Masterworks Features

Masterworks has several aspects that attract investors. The team is extremely talented, and their determination and experience help investors earn maximum profit. Below are some highlighted features offered to their investors:

Excellent Art Investment Research

Users are provided with very good research resources on the fine art market and industry including, a contemporary art investments database that tracks thousands of pieces of artwork. You can search for specific famous artists and research artist markets, including the purchase prices for their work.

They also provide users with an abundance of articles and videos teaching a plethora of art investment offerings and strategies.

High Potential Industry

Surprisingly, artwork has historically produced a higher rate of return than stocks, bonds, mutual funds, and real estate. The average annual return on art investments over the past 26 years has been 14.1%. By comparison, the S&P 500 has earned 9.9%.

Crème De La Crème

When it comes to securing the big names in fine artwork, Masterworks has it in the bag. They often feature famous paintings and pieces of art by Jean-Michel Basquiat, Joan Mitchell, Picasso, Banksy, and many more 7-8 figure artworks.

Great Customer Support

Great customer service is hard to come by these days. Masterworks offers customer support via phone and email.

You will have the ability to connect with an art specialist where you can discuss your goals, risk tolerance, and everything investing.

Masterworks Performance

Masterworks has purchased millions of dollars worth of paintings since it was founded, to the tune of more than $200 million. They’re easily a top buyer in the space, with over $500M+ in securitized paintings.

Because they haven’t been around all that long, Masterworks has only a few exits from their investments. With such limited data, Masterworks still claims that on average you will see a 30% annualized return.

Masterworks has a very successful track record, but there are always risks associated with investing. There is no guarantee that all shares will be tradeable or liquidity through the secondary market.

Remember, fine arts is a highly subjective investment vehicle.

Masterworks Strengths

Diversification

Masterworks gives the opportunity to diversify assets through investing in pieces of artwork. It has revolutionized the investment world.

Data

Masterworks provides the user with access to their database on the art and fine art markets. You can search for a specific artist and ongoing prices. The platform provides complete information about recent sales and annual investment returns.

Anyone Can Invest

Masterworks is available to anyone to invest and you don’t have to be an accredited investor. The platform was established and designed specifically to help investors of all kinds from wealthy investors to everyday investors.

Masterworks Weakness

Users Design their Own Art Investment Portfolio

Although investors are charged an annual management fee, they still require you to design your own portfolio.

No big deal if you have knowledge of contemporary artwork but, not ideal for the average Joe.

Thankfully, Masterworks experts assess the quality of each piece and only list those that they think have good investment potential. Additionally, Masterworks pre-vets artists to take all the guesswork out. So theoretically, any investment you make should see good returns.

High Tax On Fine Arts

Fine art is taxed as a collectible and at a long-term capital gains tax rate of 28%. Compare that to traditional long-term capital gains tax rates of 20% and the extra 8% can add up.

Masterworks Review Final Thoughts

There’s no doubt Masterworks is an innovative, art investment platform that allows you to diversify your investment portfolio with alternative assets. The ability to invest in multi-million dollar artwork is appealing and so is having it all managed for you.

With a valuation of over $1 billion dollars, Masterworks isn’t going anywhere and will be a relatively safe alternative investment.

So, if you’ve been thinking of investing in the art market but don’t have a spare couple of million laying around, then Masterworks is the option for you.

Get Started With Masterworks Today