Why Do Hedge Fund Managers Invest Huge Amounts in Fine Art?
Hedge fund managers are often extremely wealthy. These investment advisers take great risks every day in financial markets, but they tend to be less adventurous with personal hobbies. Art collecting allows hedge fund managers to flaunt their wealth and reserve risk-taking for the markets.
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Identification
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Renowned hedge fund investors often earn hundreds of millions of dollars over a career. Art collecting can require large sums, and displaying fine art is often a sign of prestige.
Risk Taking
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When an investor selects a hedge fund, it's often because of the manager making the investment decisions. Much of a hedge fund's business is tied up in the manager. As a result, managers usually refrain from risky hobbies--such as gliding, which killed hedge fund manager Jean-Pierre Aguilar in 2009.
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Prestige
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Hedge fund managers invest huge amounts of money in fine art because they can, and for the prestige attached with being a collector. Manager Steven Cohen, who earned $350 million in 2003, has spent more than $300 million on his art collection, according to The New York Times.
Trends
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According to Forbes, the news media has touted fine art as the trendiest of collections. Financial experts, including hedge fund managers, have contributed large sums to this trend, propelling the careers of many artists and consultants and boosting the fortunes of several galleries.
Size
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Ken Griffin founded one of the largest hedge funds in the world, Citadel Investment Group, valued at about $20 billion in 2009. Griffin paid $80 million for Jasper Johns' "False Start," according to The New York Times.
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- Photo Credit Image by Flickr.com, courtesy of .estelle f.
