Determinants of Art Prices and Performance by Movements: Long-Run Evidence from an Emerging Market

Abstract

Art has become an increasingly important asset in the portfolios of investors. However, the literature on the investment attributes of art from emerging markets is limited. We address this gap by analyzing 5,961 artworks executed by 69 Venezuelan artists and sold at auctions worldwide between 1969 and 2014, the longest art returns period ever assembled for an emerging market, estimating a hedonic price regression. Geometric mean nominal annual returns were 4.3%, slightly above inflation. Ceteris-paribus, artist reputation explains art prices, the most expensive artworks are sold at Sotheby’s and Christie’s, are dated and executed in oil, and correspond to the following topics: Abstract, self-portraits, objects, still life, urban and landscape. Venezuelan art exhibits low correlation with Venezuelan and U.S. stocks and bonds. We find, contrary to most of the literature, a strong “masterpiece effect” for Venezuelan art, and also that abstract artworks outperformed portfolios of figurative and landscape paintings.