Source of underlying data: Artnet’s database includes sales from 1,600 auction houses worldwide, including the results of online auctions from the companies that make this information available. These include lots sold via Artnet’s website, but also through external sites such as Auctionata and Heritage Auctions.
How Useful Are Art Indices?
These external sites do not include Sotheby’s and Christie’s, although Sotheby’s online-only auctions through its new partnership with EBay have yet to start. Jordan Quitko, director of product operations at Artnet, reports that Christie’s used to publish the prices from these sales, but has since stopped. Quitko says that Artnet is actively talking with Sotheby’s and Christie’s about obtaining these results.
Index methodology: Artnet organizes auction sales into comparable groups, which includes repeat sales at auction as well as art works that have only sold once, as long they share enough characteristics with the other artworks in that group. Index values for individual artists within Artnet’s market sector indices are calculated based on the median price per lot for each artist within these groups, excluding prints, multiplied by total lots sold for that artist.
The Artnet Contemporary C50 index, for example, ranks the top performing 50 contemporary artists based on their index values each year, subject to a decay formula that looks back five years, and gives each of those 50 artists equal weighting in the index. This approach is said to capture 75% of all sold lots in the Artnet database, but does not include bought-in lots.
Performance of the Artnet Contemporary C50: Up 120% from January to July 2014.
Performance of the Artnet Modern 25: Down 54% from January to July 2014.
3. Artprice Indices
Indices available: Artprice publishes the Artprice Global Index, from which it also extracts results for different art periods, such as contemporary and modern art. Subscribers to its website can also generate artist-specific indices.
Source of the underlying data: Sales from 4,500 auction houses, but generally not the results of online auctions, according to Jean Minguet, Artprice’s head of econometrics, either because those results aren’t published (as in the case of Christie’s) or because they are not sold through a live auction format, which includes sales on Artprice.com. However, its database does include results from companies like Heffel that do hold live online auctions and publish the results.
Index methodology: The Artprice Global Index also uses the repeat sale methodology to track the performance of individual artworks that have sold more than once at auction and bought-in lots are not included.
Performance of the Index: Artprice would not release the latest year-to-date results for its index, but its price index for contemporary art increased 102% in 2013, while post-war art rose 76.7%.
It’s worth ending by saying that although art indices have a selection bias, they’re not the only ones. Under performing stocks are periodically switched out in favor of better performing names in the S&P500, for example. A key difference here, though, is that art indices, which are an amalgam of historical art sales, are not investable indices.
You can buy an index fund that replicates the performance of the S&P500. You can’t buy a fund that gives you exposure to the Artnet C50, for example; you’d need billions of dollars and amazing powers of persuasion to prize all the artworks included in the index away from their current owners to achieve that. And as I’ve written before, and as Adam suggests in the Warhol example above, even if you could buy different artworks by all the artists included in the index, they would not be a reliable proxy for its performance.
All these indices are a useful resource as long as people understand the different ways in which they slice and dice the market: you might be following the results of 25 or 50 or 1000 artists. Ultimately, though, they all focus on the best performing slice of the auction market. If we had more data available from online auctions, from private sales at auction houses and from all the traditional dealer and gallery sales conducted worldwide, would the returns posted by art indices actually look better? Perhaps, but given that all this information is missing, it’s impossible to tell.
When we’re looking for useful information about prices in the art market, a lot of the time we’re still searching in the dark.
Credits
Kathryn Tully
Contributor
Kathryn Tully
Contributor
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