May 2015
The art of investing

Allison Liu is a trader… of sorts. No, she does not deal in stocks or bonds, nor currencies or commodities.

And instead of talking bulls and bears, you'd more likely find her discussing tigers - that is, painted ones.

You see, Allison deals in that most abstract of trades, art. It's a world where one's eye for the aesthetically pleasing can mean picking up a painting for US$100,000 today and selling it for over a million dollars just a couple of years later.

The Nanyang MBA (Banking and Finance) Class of 2000 alumni says: "Art is an alternative asset that can mostly withstand market fluctuations in the short term and maximize mid-to-long term gains. In an economic downturn, you will find many similar properties or stocks readily available, but when a unique art masterpiece is put up for sale, collectors will still compete to buy it."

The founder and managing director of Bergen Art Investment certainly has that handy knack for appraising art, thanks to her lifelong interest in art.

As a child in Beijing, she got her head-start learning painting and calligraphy skills from local masters. As an adult, she's trained under the watchful eye of Cultural Medallion recipient Lim Yew Kuan, the second principal of the Nanyang Academy of Fine Arts.

Allison's passion for art came full circle in 2013 when she started Bergen, which caters to high net-worth people looking to invest in collections of fine art.

The seeds had been sown in 2006 when she first started looking seriously at art. During this time, she began reading extensively on the subject, be it Eastern or Western, ancient or contemporary. On her personal travels to cities like Paris, London, Beijing and Taipei, Allison would pack her itineraries with museum visits, rather than spend the time shopping.

She also surrounded herself with like-minded people, spending much time talking to industry seniors. Allison devoted herself to sifting through their personal biases, so she could arrive at a 'philosophy' to call her own and that would enable her to succeed.

Later, as Bergen's director, she embraced a broad role which includes researching, liaising with museums on exhibitions, sourcing for artwork and authenticating them, negotiating deals, and identifying artists to focus on. She still does all of the above today.

Yet, Allison has never complained. "You can do something well when you love it and want to do it even without being paid. When I'm researching on art at 1am, I can say that I'm working overtime or I can say that I'm happy to do it because it builds up my knowledge."

 

A collage of art and finance

By positioning Bergen to focus on art investment, Allison has successfully married her love for art with her talent for investment.

"I started out as an art collector, but as society became more mature and could better appreciate art, the price of fine art surged too. I started to find myself restricted by finances so I thought, 'Why not gather more resources and aim for something greater?'"

With that in mind, she launched Bergen's first fund towards the end of 2013. Says Allison: "There's a minimum investment sum and number of years you must commit, but no admin or management fees. It's a profit-sharing model and we've so far outperformed the market by quite a lot."

Allison's clear direction for Bergen has aided its success. She shares: "My approach to art investment is similar to Warren Buffet's investment philosophy - identifying true value, buying and holding for a reasonable period, and then cashing out for profit."

"The key is finding true value. We don't 'package' artists to manipulate their market value, because without true value, the price will still eventually collapse even if you had supported it with all your resources. There are many artists who fade away after the value of their works experience a short boom, leaving collectors burnt."

Allison's strategy is to focus on the old Asian masters, such as 'Father of Modern Chinese Ink Painting' Liu Kuo-sung.

She says: "Artists like him are well-established with good academic background, a solid base of collectors in Asia and even globally, and a strong personal-style that give them a prominent status in art history. Their art usually generates stable financial returns."

However, being able to identify the right art to invest in doesn't mean much if you cannot afford to acquire it. For instance, in 2014, Bergen missed an opportunity to purchase an art-piece - valued at over a million dollars - by acclaimed Japanese artist Yayoi Kusama for a cut-price S$500,000.

Little wonder then that Allison is always on the lookout for fundraising opportunities. Most recently, she has been liaising with banks and giving talks to their selected privilege banking clients on art collection and investment.

She has already received support from another source."The Nanyang Business School has a strong alumni network - I still keep in contact with many of my peers and some have even become my business partners."

Allison is just as grateful for the knowledge she acquired while pursuing her Nanyang MBA, which has helped shape her approach to investing in art. "My banking and finance background has trained me to be more conservative with my investments, taking calculated risks but knowing my limits."

It's an approach that works. One of Bergen's paintings sold for over a million dollars, reaping profits of close to half a million for the company and its clients.

But ask Allison which painting she holds the greatest attachment to, and she names a piece from her personal collection valued at just S$40,000.

She says: "It's an ink painting of a tiger by the late Taiwanese master Lin Yu-shan. I feel it symbolizes me as I was born in the Year of the Tiger."

"It’s very challenging for artists to catch the 'spirit' of tigers but Lin has done so here. Almost every Taiwanese collector who has visited me has offered to buy it, and a Singaporean tycoon who only collects contemporary art has also enquired about it several times. This shows that be it Eastern or Western, ancient or modern, good-grade fine arts share some common appeal."

By Christopher Ong