The good news is that the study, published on the Oxford Academic website, suggests wealthy collectors can potentially enjoy the “emotional dividends” of owning art without missing out on returns. The bad news is that they’ll have to be either pretty astute in picking winners, or damned lucky in the artworks they buy. Keynes probably benefited from both.
Keynes started building his collection in 1918, buying works by Cezanne and Delacroix. In the following years, he added pieces by Cezanne, Degas, Matisse, Modigliani, Picasso, Renoir and Georges-Pierre Seurat. The latter purchase, at a price of 400 pounds ($520), was a preparatory study for the pointillist artist’s most famous work, “A Sunday Afternoon on the Island of La Grande Jatte.”
He resumed purchasing artworks between 1935 and 1937, including spending 3,500 pounds on Cezanne’s “L’Enlevement,” the most Keynes ever parted with for a single piece. By the time he bequeathed his portfolio to King’s College at his death in 1946, he had spent a total of 12,847 pounds amassing 135 pieces. (I sit on the King’s College investment committee that manages the endowment.)
While the report says it found no evidence that Keynes ever sold a painting he’d purchased, he wasn’t sentimental about his collection; in his will Keynes gives permission for its executors to sell parts of his bequest if needed to maintain his widow’s income.
The study values the collection over time by using various insurance appraisals conducted over the years as well as estimates commissioned by the authors from specialists in 2013 and 2019. If the combined works had kept pace with inflation, they would have been worth about 500,000 pounds last year. Instead, they were worth 76.2 million pounds, not too far short of the 90.2 million pounds the authors calculate Keynes would have generated in the U.K. stock market. “The long-term returns from the Keynes collection are substantial,” according to the report’s authors, David Chambers and Elroy Dimson of the University of Cambridge’s Judge Business School and Christophe Spaenjers of HEC Paris.
But there’s a catch. The ten most valuable items of the works he amassed account for 88% their total value — and just two of the works account for almost half of the entire collection’s valuation.
While the study doesn’t identify which works they are, I’m pretty confident that the Seurat study I mentioned earlier, which currently hangs in Cambridge’s Fitzwilliam Museum, is one of the blockbusting pair. The other, which the study says Keynes acquired for the princely sum of 1.50 pounds, was worth 20 million pounds in the most recent valuation. That’s quite a return.
If Keynes hadn’t been lucky or skilled enough to have bought those two stellar performers, the value of his collection would fall far, far short of what the stock market has delivered. “Extreme idiosyncratic positive returns — or the absence thereof — will matter a whole lot for the total return of any art portfolio,” the authors of the study write, with masterly understatement.
So the lesson from Keynes, if there is one, seems to be that in buying art, those emotional dividends stemming from the joy of ownership are probably a more reliable motivation than the prospect of turning a profit.
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Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”
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