Thursday, Oct 9, 2008
Intrade http://www.intrade.com/ The Prediction Market Ltd. announced Thursday an agreement with Beautiful Asset Advisors LLC to create the world's first publicly traded futures contracts written on the global fine art market.
Intrade will list on its prediction market platform cash settlement futures contracts based on Beautiful Asset Advisors' proprietary Mei Moses All Art Index. The All Art Index measures the health of the fine art market by aggregating sale-over-sale auction prices of individual pieces.
Intrade's cash settlement Mei Moses All Art Index futures satisfy an unmet demand for tradable and transparent investment vehicles based directly on market valuations of fine art. The futures will allow investors to take long or short positions on a diversified and liquid fine art asset without the outlays or risks associated with purchasing and holding individual works of art.
Over the past ten years the All Art Index has shown higher annualized returns and lower volatility than the S&P 500. Art also outperformed bonds and bills during that time. The 2008 midyear tracking report for the All Art Index showed a gain of about 5% compared to the double digit loss for the S&P500.
Interest in art as an asset class has also been driven by observations that art values tend to have very little correlation with stocks and bonds, suggesting that art-based derivatives could be valuable investment vehicles for optimal portfolio management. For the last 50 and 25 years, the Mei Moses All Art Index shows a very low correlation factor of -0.01 and 0.04, respectively, with the S&P 500, and small negative correlations with bonds for the same time periods.
The Mei Moses All Art Index is created from a database of over 12,000 repeat sale pairs and uses a statistical methodology similar to that used in the creation of the S&P Case-Shiller U.S. residential real estate market index. The art index is calculated annually. It was first published in 2001 when its founders were professors at the Stern School of Business at New York University.
Analysts have estimated the global fine art market has annual sales of over $25 billion of which half is generated in the auction market and that fine art has a total capitalization exceeding $1 trillion.
Information on historic performance of the index and interim current year tracking results are available through Beautiful Asset Advisors' website at www.artasanasset.com.