A beautiful painting or a rare artefact may look great on your wall or in your showcase. But, how does it look in your portfolio? Well, the art market returned 11% to investors in 2011. This outpaced stock market returns from equity investments for a second consecutive year. According to Financial Times, the performance of the Mei Moses All Art Index, a leading barometer of art returns has beaten the S&P 500 in six of the last 10m years. It has posted an average annual return of 7.8% compared with 2.7% for the US Index. Strong Chinese demand as well as high prices of work by popular artists led to the Art Index's recent rise. But while the art market has shown good returns, it doesn't make sense for investors to jump on the bandwagon. Current economic conditions have made art collectors more cautions, and if the slump continues, the industry may see slower growth.
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