Frequently Asked Questions

Alternative funds are funds that invest in alternative assets, i.e., assets that are not stocks, bonds, or cash. Examples include collectibles—such as art, antique cars, rare coins, and wine, commodities (e.g., gold), hedge funds, private debt and equity, structured products, and real estate.

Alternative assets are typically characterized by:

1. limited public market data although this is now changing in many alternative asset catergories.

2. while they may offer attractive risk-adjusted returns, alternative assets are often illiquid and must generally be held for the term of an investment.

3. have low or negative correlation to traditional stock and bond markets. 

4. require specialized investment skills and extensive knowledge on the part of the asset manager. This contrasts with publicly traded markets that employ traditional management strategies.

A key benefit of alternative assets is that they offer portfolio diversification, and are generally insulated from market volatility. Such assets also involve risk that can result in significant loss and therefore are not suitable for all investors.

54 Projects LLC is a Delaware limited liability company founded in March 2023 to act as the Manager for the 54 Art Fund

54 Art Fund LLC is a Delaware limited liability series company formed to invesment in post-war and contemporary art.

It depends in part on selection but according to the Chartered Alternative Investment Analyst Association (CAIA), contemporary art outperformed the S&P 500 from 1995 to 2020 with a 14.0% annualized price appreciation as compared to 9.5% for the latter. 

The 54 Art Fund will have legal ownership of the artworks in its portfolio.

No. The 54 Art Fund is private and is only available to investors that meet its investor criteria. Public funds may be available in the future.

Yes. The fund will show a limited selection for public access. Private viewing and digital gallery for investors.

Yes, the art will be insured by leading global insurers.

Yes, at least once a year for insurance purposes.

Two percent management fee per annum and a 20% incentive fee based on realized profits payable at the end of the fund term.

Expenses include appraisal, audit and tax, administrator fees, insurance, legal, storage, travel, transportation, and other related properly incurred fund expenses. The fund will establish a reserve account to provide for each respective series’ expenses during the term of the fund. 

The 54 Art Fund offers diversified balanced funds of post-war and contemporary artworks from blue-chip, mid-career, and emerging artists selected from around the world by leading art experts. Masterworks specializies in securitizing “iconic” artworks for anyone to invest. 

The fund is comprised of “real assets,” namely, artworks that are generally held for long-term capital appreciation. Hedge funds trade intangible assets, like bonds and stocks that are typically more liquid and volatile. Their trading techniques may involve a “black box” approach.

Expertise and Research

An experienced team of professionals with in-depth knowledge of the art market which conducts thorough research, tracks market trends, and identifies valuable artworks with potential for appreciation.

Diversification

Art funds that maintain a diversified portfolio reduce their exposure to individual artwork or artists. By investing in a range of art genres, periods, and artists, they spread the risk and increase the likelihood of positive returns.

Access to Exclusive Opportunities

Well placed art funds often have access to exclusive art collections, private sales, and private auctions. This enables them to acquire high-quality artworks before they reach the broader market, potentially securing valuable investments at favorable prices.

Network and Relationships

Successful art funds build strong networks and relationships within the art industry. They collaborate with galleries, dealers, curators, and collectors, gaining access to valuable insights, key information, and potential investment opportunities.

Prudent Management and Strategy

Effective fund managers assemble art portfolios to withstand changes in trends and market conditions with a view to long-term capital appreciation returns. They may opportunistically select to strategically buy, sell, or trade artworks to maximize returns and mitigate risk.

Investor Confidence and Transparency

Managers with a team with a track record of delivering positive returns and demonstrating transparency in their operations can gain the trust and confidence of investors. This encourages them to commit capital to the fund and potentially attract new investors.

A Long-Term Investment Horizon

Successful art funds often have a long-term investment horizon. They understand that the art market can experience short-term fluctuations but generally exhibits long-term appreciation. By adopting a patient and strategic approach, they can weather market volatility and generate positive returns over time.

First-in-Class Fund and Art Service Partners

This is critical to ensure the smooth operation of the fund consistent with adherence to the highest standards of integrity and transparency.

Art, like any market, still carries risks. Success is not guaranteed, and careful due diligence and assessment of the fund's track record, management team, and investment strategy are essential for potential investors.

Accredited Investors as defined by the SEC, which for individuals means:

• Net worth over $1 million, excluding primary residence (individually or with spouse or partner)
• Income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years, and reasonably expects the same for the current year.

$250,000

No

The target size for each of the six fund series is up to $100 million or as otherwise determined by the Manager.

Interests in the fund are restricted securities, and as such, cannot be sold for at least six months or a year without registering them. Thereafter, resales can be made with a valid exemption from registration, such as Rule 144. Investors should expect to hold their investment until the end of the fund's term.

Typically 6 to 12 months from launch or as determined by the Manager for each series for an Initial Closing. Additional and/or Final Closing also determined by the Manager.

Yes, for each tax year. 

The fund does not expect to have taxable income during any tax year, except for the year in which its portfolio of artworks is sold. In which case capital gains tax will be incurred if there is a profit.

An investment in an art fund is a pure financial play. It is removed from a collector’s own tastes or biases and can enhance returns and diversify risk in their art, as well as overall asset allocation. 

Yes. Either directly or through the fund's offshore feeder fund. In either case, prospective investors that qualify should consult with their legal and tax advisors to determine the tax ramifications of an investment in the fund and if it is suitable for their circumstances.

Qualified investors (e.g., Accredited Investors ) can invest by completing the fund's subscription agreement and meeting its terms.