It’s the holy grail of art investment products; many have talked about it but few have attempted it; a successful system remains elusive; Michael Saigh of the Liquid Rarity Exchange (LRE) claims he’s cracked it. What is it? A new art investment system that faciliates the securitization of investment-grade rare and precious assets – in other words, a system allowing art to be owned in fractional shares and publicly traded for the first time.
Basically what Saigh is offering is a new way for investment companies to develop funds of valuable assets which can then be publicly traded. LRE will offer licensing opportunities to investment companies that will introduce, underwrite and manage Liquid Rarity funds. In addition, LRE plans joint venture relationships with investment banks and global insurance companies. According to Saigh, “LRE provides a comprehensive solution to tangible asset management, market ready for investment company adoption, while allowing investment companies to concentrate on their core competencies and strengths.”
The difference with the Liquid Rarity Exchange over previous attempts at developing art investment trading platforms is, according to Liquid Rarity Exchange’s Andy Saigh, a patented invention by Saigh titled “System and Method for Asset Utilization” filed in 2006 and issued in 2011. In short, this “core” patent will provide a new tangible alternative investment based on a market that has increased in value at a rate unmatched by most major stock market indexes over the last 30 years. Through LRE, investors will have the ability to purchase fractional shares of Liquid Rarity™ fund assets.
“LRE is currently considering several fund proposals in the $35M to $100M range that could trade publicly trade in the next 12 to 18 months. We expect Liquid Rarity funds to create a powerful opportunity to enter the publicly traded rarities market,” commented John Rood, VP of Investment Finance at LRE.
Liquid Rarity™ funds will be offered to the general public in the same manner as traditional securities, thus uniting the publicly-traded financial world with the world’s top experts in the vast and diverse field of rare valuables. Rarity asset specialists will hand pick rarities in their respective field of expertise which have the greatest likelihood of appreciation. Licensed rarity asset appraisers will estimate and confirm the asset’s value. Investment companies will be provided the opportunity to choose from a variety of Liquid Rarity™ approved fund proposals, in the range of of $35M to $100M+ each, developed with the expertise of licensed specialists and appraisers.
The LRE patent application states that:
“The present invention is a computer system or method for obtaining, maintaining and controlling an exchange of tangible assets over a global computer network. ln one embodiment, the present invention is a computer system having memory, the system being adapted to identify one or more art assets which may be categorized into a collective art asset pool from third party appraisers or from an automated appraisal process, to obtain an initial appraisal value for the art asset pool or from an automated appraisal process, to calculate an appraisal value for the art asset based upon the appraisal information it obtained, to obtain orders from potential investors and/or brokers, process such orders, to continuously monitor art asset value against appraisal information, and is further adapted to automatically switch ownership units amongst art asset pools based upon predefined triggering threshold events. The present invention creates a dynamic buy-sell environment for art assets over a global computer network which utilizes typically non-utilized art assets in a way that creates demand and appreciation, while currently having no change or impact on the control and use of the actual art asset.”
According to their website, the benefits of the Liquid Rarity™ funds are:
- are a new tangible asset class of securities, backed by government issued intellectual property.
- are co-managed/serviced by the top rarity experts/specialists in each sector.
- focus on the highest quality assets and highest profit potential.
- are comprised of rarity sectors that provide a significant history of average annual returns.
- offer the benefits of public securities compared to private investments in rarity assets.
- enable retail investor participation in specific rarity sectors via public securities for the first time.
- allow financial advisors to diversify clients and allocate into a rarities strategy.
- incorporate state-of-the-art asset protection and tracking systems, resulting in reduced insurance costs.
- match the global demand for rarity assets in view of market volatility and geopolitical uncertainties.
- are partnered with experienced, strategic and innovative investment banks.
The big questions is, will it work? …… Only time will tell.
**Nicholas Forrest is a Sydney/London based art market analyst, art consultant and writer. He is the founder of the Art Market Blog (artmarketblog.com) which offers independent commentaries as well as research and analysis on the current art market, and has recently been published in Fabrik magazine, Verve magazine, Visual Art Beat magazine, Australian Art Collector magazine, Art & Investment magazine and many others. Nic has made several radio appearances (both nationally and internationally) as an art market expert and has received press from the likes of the New York Times, Conde Nast Portfolio and Times of London.