Art Trusts Saw Explosive Growth in 2011

A total of 18 domestic trust companies rolled out 45 art trust products in 2011, a 350% increase from 2010. Funds raised from such products reached RMB5.5bn last year. The average maturity period was 2.18 years with annualized returns of 9.86%.

The art trust product market in China is still in the preliminary stages, but has seen rapid development over the past two years. There are several investment channels, including private funds, art stock shares and trust products. The previous two channels are not commonly used in China. Investors in art private funds tend to be HNWIs with a preference for experienced fund managers with performance track records; the scarcity of such GPs in the China market has pushed investors to explore other investment channels. At the same time, art stocks in China maintain a low capital threshold for new accounts. Perhaps by default, art trust products have gained in popularity as trust companies boast both performance records and the ability to design products according to client risk preferences. Some art trust products have set a timeline for investors to purchase and redeem trust shares in order to accommodate art investment cycles.