Masterworks Review 2024

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‌Masterworks is a fintech platform for buying and trading shares in multimillion dollar works of art by artists such as Banksy, Basquiat, Picasso, and more. The platform sells fractional shares of physical art, not nonfungible tokens.

Launched in 2017, Masterworks makes it relatively effortless to invest in fine art by handling the entire process of selecting, buying, storing, and eventually selling the artwork. As an investor you’ll work one-on-one with a Masterworks financial advisor to determine an investment suitable for you.

The platform has more than 800,000 members, with 344 artworks purchased, and nearly $900 million in assets under management. Masterworks generally acquires new artwork weekly, allowing investors to participate in future offerings and further diversify their art investment portfolio.

Read our review to learn about Masterworks’ minimum investment, how the platform works, and ways to invest.

Masterworks

Masterworks

Fees

1.5% annual management fee.

20% of any profits.

Min. deposit

$0

TIME’s take

Masterworks provides everyday investors a chance to access what has traditionally been an exclusive market with high entry costs. While the best online brokers typically stick to traditional asset classes, such as stocks and bonds, Masterworks offers something unusual: the opportunity to invest in fractional shares of fine artworks without having to buy and manage an entire piece (or collection) on your own. This means you can diversify your portfolio with an alternative asset class that has historically shown strong returns without spending millions of dollars.

Masterworks has a solid track record for choosing profitable artworks, but the platform isn’t suitable for all investors. Fine art investments generally have less liquidity and higher risks than stocks and bonds. It’s best for investors who are comfortable with the art market’s unpredictable nature and keen to diversify their portfolios further.

Pros and cons

Pros:

• Accessibility. Masterworks allows fractional ownership, making investing in fine art accessible to more investors.
• Regulation. Masterworks securitizes each artwork by filing an offering circular such as this one for a Banksy piece with the Securities and Exchange Commission (SEC).
• Guidance. Investors work one-on-one with a Masterworks financial advisor before choosing investments.
• Research. The platform provides expert analysis on individual offerings and the contemporary art market.
• Trading market. You can sell your shares early through Masterworks’ secondary Trading Market (though there are no liquidity guarantees).

Cons:

• Liquidity risk. Art investments have less liquidity than traditional asset classes. l Masterworks has a secondary market but doesn’t guarantee it will provide enough liquidity or a reliable means of monetizing your investment.
• High fees. The platform charges a 1.5% annual management fee and takes a 20% commission on profits when it sells the artwork.
• Investment minimums. Masterworks doesn’t have a set investment minimum, but the threshold may still out price some would-be investors.

Who should choose Masterworks?

Masterworks is best for investors who already have a diversified portfolio of traditional assets and want to further diversify by adding an alternative investment with noncorrelated returns. Investors should have a higher risk tolerance (financially and emotionally) and be comfortable with the art market’s inherent illiquidity and unpredictability. Of course, investors should also be looking for high potential returns.

“Postwar and contemporary art has appreciated over time at 12.1% annualized, outpacing traditional asset classes like equities,” says Matt Sutherland, SVP of communications, content, and partnerships at Masterworks. “We believe that investors should consider investing with Masterworks if they are exploring the benefits of alternative investments, such as the potential to both enhance portfolio performance and manage portfolio risk.”

According to Sutherland, a 5% allocation to postwar and contemporary art has improved a traditional “60/40” portfolio’s price appreciation in 98% of five-year periods and 100% of 10-year periods. “We believe this asset class can be an attractive diversifier for investors’ portfolios.”

Masterworks permits those who are not U.S. residents to invest, except for residents of countries under embargo by the U.S. government.

How does Masterworks work?

Masterworks’ research team uses proprietary data to identify the artist markets with the most momentum fewer than 3% of artworks pass its diligence process. Its acquisitions team selects a good piece at a fair price and then purchases the work, typically acquiring “blue-chip” artwork from major auction houses, private collectors, and established galleries. Masterworks then files an offering circular with the Securities and Exchange Commission (SEC) to securitize the artwork, so anyone can invest.

Masterworks holds the artwork for three to 10 years while looking for a good opportunity to exit the investment. Its private sales team collaborates with top collectors in the art world, sells the work directly to them, and then sends you your pro rata proceeds after fees. To date Masterworks has sold almost two dozen artworks by artists such as Banksy, George Condo, Cecily Brown, and Simone Leigh.

If you want to cash out early, you have the option to sell your shares on the trading market. However, Masterworks doesn’t guarantee the market will “provide enough liquidity, a reliable or effective means of monetizing your investment, or valuing your shares.”

The platform’s “My Portfolio” page serves as a dashboard to track your investment(s) in real-time.

Ways to invest with Masterworks

Masterworks offers shares of individual artworks, and you don’t have to be an accredited investor or a high-net-worth investor to participate. While Masterworks experts vet the quality of each artwork it offers, you’re responsible for designing your own art investment portfolio. The Masterworks website offers good research and support tools to help you compare available investments.

Once you select an artwork, you’ll buy shares through the platform with zero trading fees. There’s an option to invest your individual retirement account (IRA) earnings through Masterworks’ partnership with Alto IRA, an alternative asset investing platform.

Steps to open an account with Masterworks

Any investor can create a free account on the Masterworks website. However, every investor is required to speak with a Masterworks financial advisor to discuss their goals and risk tolerance. “We want to make sure that an art investment is suitable for the investor’s portfolio and goals,” says Sutherland. “The vast majority of our investors have never invested in art before, so these conversations are very educational in nature.”

Masterworks fees and costs

‌Masterworks charges two fees: an annual management fee and a performance fee. The 1.5% management fee is based on the total value of your account and deducted in equity each year (meaning it gradually reduces the number of shares you own). The 20% performance fee is Masterworks’ share of any profits. It uses these fees to offset the costs of managing the artwork, including storage, insurance, and SEC regulatory fees.

How does Masterworks compare?

Masterworks

YieldStreet

RealtyMogul

Art

Alternative

Real estate

1.5% annual management fee.

20% of any profits.

0% - 2% (varies by investment type)

1% to 1.25% management fees (additional fees may apply)

$0

$10,000

$5,000

TIME Stamp: Fine art is taxed at a higher rate than traditional asset classes

It’s essential to consider how your investment will be taxed to avoid any surprises at tax time. Masterworks investments are taxed at the long-term capital gains rate for collectibles (including art and coins), which tops out at 28%. (There’s an exception if you own 10% or more of a single artwork investment. In that case you’re taxed at your ordinary tax rate, up to 37% for 2023). The rate is higher than the long-term capital gains tax rate on traditional investment assets, which is capped at 20% for the wealthiest taxpayers.

Still, Masterworks says its investments are set up to be tax efficient, with no double taxation, no mark-to-market taxes (you owe taxes only when the artwork is sold), and no tax withholding, even for foreign investors.

Masterworks

Masterworks

Fees

1.5% annual management fee.

20% of any profits.

Min. deposit

$0

Frequently asked questions (FAQs)

What is the minimum to invest in Masterworks?

The minimum investment varies by investor. “Masterworks advisors meet with every prospective investor to go over their portfolio, risk tolerance, and liquidity before establishing an amount the investor is comfortable investing in art,” says Sutherland.

Is Masterworks legit?

Masterworks is a legitimate platform for investing in fine art. The company has been in business since 2017, and all its offerings are filed with the SEC. Payouts are processed about one week after a sale announcement, and you can expect the payout to reach your account within about three to five business days, depending on how you receive the payment.

What is the return on Masterworks after fees?

According to Sutherland, Masterworks has sold almost two dozen paintings, all at a profit after fees. The artwork includes Cecily Brown (77.3% return, after fees), a George Condo (39.3%), and a Sam Gilliam (33.1%). You can view the returns for each of Masterwork’s sold paintings on its website.

How can I contact Masterworks?

If you have questions about Masterworks or are interested in investing, you can fill out the contact form or call (203) 518-5172 between 9 a.m. and 6 p.m. EST.

When it comes to painting supplies, if it sounds too good to be true, then it usually is. There's really no substitute for quality painting tools, adequate preparation, and careful work. "One of the easiest things to remember about paint tools is that you get what you pay for," says Lou Manfredini, home expert for Ace Hardware. "The biggest mistake I see homeowners make is that they buy cheap tools that don't give them good results, or they buy cheap paint—then they end up with a poor finished product."

Here are some of Manfredini's favorite must-have paint products for a flawless finish and a handful of appealing painter accessories that you can skip altogether. Keep in mind that you may not need some of these products if your walls are in good shape and don't need a lot of repairs. (Just make sure you purchase some highly-rated paint first because a quality tool won't work miracles on low-quality paint).

Must-Haves

• Wall Cleaner
  You want to work with a clean surface since a dirty wall could prevent the paint from adhering or cause the paint to bubble. "I like to use a classic cleaner, Spic and Span, with a little bit of water and a sponge to get any surface dirt off the walls before I paint," says Manfredini.
• Painter's Tape
  While purchasing a quality painter's tape like 3M or Frogtape is important, it's more about how you apply it. Once it's on the wall, run a damp rag over the edge to create a seal. Pay attention to the release dates, or when the tape needs to come off, it varies from 15 to 30 days.
• Brushes
  A 2 1/2-inch angled brush was made for painting trim and cutting in. Look for quality brands like Wooster, Purdy, and Benjamin Moore.
• Rollers
  A standard 9-inch roller with a synthetic core and a 3/8-inch nap is a classic. "Test the core, take your thumb and index finger and push down on each side on the end of the roller. You shouldn't be able to close that opening," says Manfredini. "Ace and Shur-Line both make quality roller covers. Mini paint roller frames are also convenient for working around small spaces."
• Canvas Drop Cloths
  "Sure, it's a little more expensive to buy canvas, but if you're going to take on a painting job, you'll have these for the rest of your life," says Manfredini. "Get the 4-foot-wide runner length to use near the walls."
• Paint Brush Cleaner
  This painting product ensures that painting newbies get their quality brushes completely clean for future use.
• Plastic Bucket
  It's easier to pour paint into these containers than to work from a quart or gallon.
• Plastic Roller Tray
  Instead of metal, buy a heavy-duty plastic tray. They're rigid, but when you go to clean them, the latex paint doesn't stick and comes right off.
• Roller Extension Pole
  An extendable two-foot roller extension should work in most spaces, but keep the height of your ceiling in mind when shopping for supplies.
• Sturdy Ladder
  A standard six-foot aluminum or fiberglass ladder that fits your weight specifications (don't forget that you need to add on approximately how much you'll be carrying up it) is a good investment piece.
• Touch Up Tool
  For quick paint touch-ups around the house, invest in the Shur-Line Touch Up Painter, available at hardware stores. "If your walls take a lot of abuse, this little gadget holds extra paint for easy touch-ups," says Manfredini.
• Pre-Mixed Spackling
  This product works for most patching jobs and nail holes. Look for DAP Fast n' Final or Drydex, since both dry quickly and are easy for novice painters to use. Drydex is especially cool because it goes on pink and then turns white when it's dry, so you never have to guess. You'll also want caulk for filling in gaps between the walls and trim.
• Putty Knife
  Skip the 7-in-1 tool. Instead, you'll want a two-inch putty knife and a six-inch-wide taping knife, both with flexible blades. They'll help patch cracks and apply joint compound.
• Fiber Mesh Tape
  This wall repair tool is ideal for covering larger holes, look for versions from Hyde, Purdy, or Shur-Line.
• Sanding Sponges
  A medium and fine grit sponge can handle most jobs. "If you don't want to make a lot of dust by sanding, skip the sandpaper and smooth your spackle out with a damp sponge and warm water," says Manfredini. "It will get the job done with zero dust."

Skip It

Paint Key

You don't need a special tool to open your paint cans; a standard flat-head screwdriver works just fine.

Plastic Tube for Paint Roller

If you're done painting for the day but want to pick it back up tomorrow, cover the roller in plastic wrap, then throw it into a plastic bag with an air-tight seal.

Paint Tray Liners

These aren't necessary if you get a quality hard plastic paint tray. Plus, it's less wasteful if you don't throw away a plastic liner each time you paint.

Paint Pads

Skip these, unless you're using them to paint behind hard-to-reach areas like a toilet tank or radiator.

Fillable Paint Products

"Any gadget that sucks paint up into its handle is a nightmare to use and to clean. In the time it takes to refill it, you could already be painting," says Manfredini. The exception here is the touch-up tool that Manfredini recommended specifically.