A guide to understanding blue chip art

Smith Partner
11 Aug 2020

The words “blue chip” are often used in business as a means to describe large and historic companies, usually industry leaders, whose value is recognised universally. Likewise, “blue chip art” pieces are those that have been designed by the most widely recognised and leading artists, whose stance on the auction market has been authenticated by outstanding sales volumes over a period of several years.

How does Blue Chip fit with the Art Market?

There is a large divide between established and speculated blue chip artists, although verification of blue chip artists often comes down to pricing within the marketplace. You might be able to obtain a painting for as little as £10,000 within a London gallery with the hope someday it’ll bring you millions, but the chances of it happening are around the same as winning the lottery. On the flip side, investment-grade art that might come with a price tag of six to eight digits that has a solid collector base boasts much more predictable rates of appreciation. Household name artists sometimes fall into this category, although they often have a proven track record of producing high-value sales when at auction.

Blue Chip Art versus the Stock Market

Those well-versed in the world of purchasing blue chip art might compare the transaction to that of buying stocks in a company, mainly because there are two similar attributes the two share; assured liquidity and high-quality. As a way of measuring how the high-end art market performs, take a look at the index below from ArtPrice100. The index shows the top 100 most important artists to aid financiers in quantifying the value increase with a focus on the most stable elements. 

image credit: ArtPrice

The index makes a comparison between artists that sell at auction and compares how it stacks up to the S&P 500.

ArtPrice explains that the index uses a database of over 6,300 auction houses to assemble its index and measures the average performance of artists across five years. In the same way, the S&P is manually adjusted to allow the latest and successful artists to join, those that are no longer successful are to leave. 

Thanks to the ArtPrice analysis, we can see that over a period of 18 years, works from artists that command large-scale collector bases and carry the highest price points have seen some fantastic increases in value, outperforming the S&P 500 dramatically by an admirable 250%.

If you’re considering securing blue chip artworks but are unsure if stocks are a better way to go, let us close with this; the findings of the artPrice100 index tells us that since 2000, the top end of the art market has increased by an average annual rate of 8.9%, whereas for the same timeframe the stock market grew at an average annual rate of just 3.4%.

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