The net value of works in the Tiroche DeLeon Collection art fund, which invests in contemporary art from developing countries, grew 5% in 2014, according to an independent analysis by Gurr Johns, an art advisory group. The collection of 406 works is now worth $20.5m, according to its valuation.
Serge Tiroche, who co-founded the fund in 2011, says: “Despite being a stretch away from our long term return objectives, the net performance was well ahead of all performance benchmarks with the exception of Real Estate.” Indeed, among his benchmarks, the Hedge Fund index was up 3.4% and the World Equities index was up 2.93% in 2014, he says. However, the net return of the US S&P 500 equity index (not one of the funds’ benchmarks) was 13% for the same period. The fund’s stated objective is to produce net investor returns of over 10% a year during its ten-year life.
The value of the fund’s Far East portfolio was the biggest contributor to overall growth, due largely to two works by Ai Weiwei, Forever (2003), bought in 2011 for $805,000 and now estimated at $2.2m, and Grapes (2008), a chair installation now valued at $1.1m.
The improved valuation does not, however, reflect the direct financial returns that the fund has made. Here, Tiroche says that works that have sold overall have, on average, exceeded the fund’s “conservative” valuation by “a substantial 17%” (net of commissions, but not other costs). In 2014, the fund bought 93 works for an average price of just over $34,000 each and sold a total of five works at auction for a gross profit of $448,000. The average holding period for these works was 2.5 years and they include Karma (2014) by the Korean artist Do Ho Suh, which sold for an above-estimate HK$6m ($778,711, including premium) at Sotheby’s in Hong Kong in April 2014. All sales out of the fund in 2014 were made at auction, a process that Tiroche describes as “a transparent and democratic sales process” that “can sometimes yield the best results.”
Unlike many of its peers or predecessors, the Tiroche DeLeon fund has a very transparent approach. Every work that the fund buys is posted on its website
. Its target, says Tiroche, is to be worth $50m.