Public vs Masterworks: Which One is Best to Invest in Art?

Public vs Masterworks: Which One is Best to Invest in Art?

Investing in fine art has never been easier with platforms like Public and Masterworks. We compare them to see which one stands out.

Public vs Masterworks: Which One is Best to Invest in Art?
Moriah Costa

Updated Nov 16, 2022

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Art & Culture

Art & Culture

Collectibles

Collectibles

Long Term Growth

Long Term Growth

  • You don't have to be Leonardo DiCaprio to invest in a Jean-Michel Basquiat painting
  • The fine art market can be accessible through fractional investing platforms
  • Public and Masterworks make it easy to invest in fine art at low minimums

 

Fine art investing has long been a popular investment among the wealthy and famous. Leonardo DiCaprio has been a long-time collector of Jean-Michel Basquiat, while Madonna's art collection includes paintings by Frida Kahlo.

Art market sales reached $65.1 billion in 2021 alone.

Contemporary art has outperformed the S&P 500 for the past 25 years, according to data compiled by Masterworks. And thanks to platforms like Masterworks and Public, art collecting isn’t just for the elite.

If you’re looking for the best way to invest in art, you may want to consider adding fractional shares of fine art to your investment portfolio. There are many platforms that make it easy to invest in fractional shares, so how do you decide which one is for you? If you compare Public vs Masterworks, two popular fractional investing platforms, both give you the chance to invest in blue chip art, but there are many other differences in their offerings.

Public vs Masterworks at a glance

For those interested in the art world, both Public and Masterworks provide a way to invest in high-end fine art without having to sell a kidney. Both platforms give investors the chance to own masterpieces by modern artists without having to be wealthy through fractional investing. They are both open to non-accredited investors and provide a curated collection of blue chip artwork.

The biggest difference is that while Masterworks is focused just on the art market, Public also gives investors the chance to buy fractional shares of other asset classes, including stocks, NFTs, crypto, luxury items, sports cards, and even first-edition books.

Public

Masterworks

Investment options

Stocks, ETFs, crypto, art, NFTs,  sports cards, sneakers, books and comics, luxury items

Art

Fees

0%

1.5% annual fee plus 20% fee at the time of sell

Minimum investment

$1

$10,000

Target returns

Varied

10-25%

Risk level

High

High

Time horizon

Varied

60+ months

Liquidity

High

High

Available on

iOS

Android

Desktop

Desktop

Do you have to be accredited?

No

No

Best for

Investors new to alternative assets who want to invest in art along with stocks and ETFs.

Investors serious about diversifying their portfolio by investing in fractional shares of blue chip art.

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Full Public review

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Full Masterworks review

What is Public?

Public is a social investing community platform that is trying to change how people invest. Founded in 2017, stars like Will Smith, Tony Hawk, and NFT star J.J. Watt have invested in the platform.

You can invest in the stock market, ETFs, and cryptocurrencies on Public, as well as different alternative investments including art, NFTs, books, comics, sneakers, Birkin bags, and more. Each item offered on their platform has been vetted by the Public team and their network of advisors.

In addition to investing, you can also monitor the investments of other users to learn from their investing strategies, including any other asset classes. Public also offers an extensive learning resource center to help you learn more about investing.

How does Public work?

It’s easy to start art collecting with Public. All you need to do is sign up, link your bank account, and fund your Public account. There are no account minimums. Public’s collectibles are securitized through the SEC, which allows them to offer fractional shares of specific items. They take care of sourcing collectibles at auction houses and art fairs, as well as storage. 

You can buy fractional shares of any of its art or other collectibles directly on the Public app or from other users on their secondary market. You can manage and view a portfolio of all your assets on the app, from stocks to art. You can earn potential returns by either selling your shares on the platform or when Public sells the underlying asset.

While Public doesn’t offer as much physical artwork as Masterworks, you can purchase artwork from several well-known artists whose work tends to increase in value. 

For example, Public offers fractional art investing shares of Banksy’s Police Car. Prices of work by the famous and anonymous street artist have gone up in recent years, with his Love Is In The Bin piece selling for a record $25 million in 2021. 

Another work available on Public is Love Is What You Want by British artist Tracey Emin. The modern artist is a favorite at auction houses, with her work often going for over a few million, and her art piece My Bed going for a record $3.77 million.

Who can invest with Public? 

Anyone over the age of 18 can invest in art through Public. You need to be a U.S. citizen or permanent resident with a valid visa and a social security number. You also need to have a legal residential U.S. address. Investing by non-U.S. residents is not available at the moment.

What is Masterworks?

Masterworks is an investing platform that specializes in offering fractional art investments. With Masterworks you can invest in a vast collection of contemporary art, including work by Andy Warhol, Banksy, and Jean-Michel Basquiat. The platform was founded in 2017 by Scott Lynn to make blue chip art more accessible to retail investors.

The company offers an education research center on its website, with extensive data on the art investing world. It claims its proprietary pricing has over 60,000 data points to help art investors project returns and make informed decisions when investing in art. 

In addition to its primary market, you can also buy and sell fractional sales of art on Masterworks’ secondary market.

How does Masterworks work?

Masterworks sources and finds art worldwide, collecting pieces from advisors, art galleries, dealers, and auction houses. The company looks at several data points to determine if an artwork is worth buying, such as the artist’s reputation, the historical appreciation rate for that style of work, and general demand for the artist’s work.

Just like Public does, Masterworks registers acquired artwork with the SEC, which gives them the ability to offer shares of the work. For a $10,000 minimum, investors can buy into masterpieces by Banksy, George Condo, Jean-Michel Basquiat, and many others.

Masterworks takes a long-term approach to investing in art. Paintings are displayed at its members-only art gallery in New York City for at least three years, at which point the work is assessed to see if it’s a good time to sell it or not. If there is interest, then a private collector can buy the artwork but any offer must be approved by shareholders. Once the artwork is sold, the proceeds are divided up among investors. If the painting isn’t sold in seven years, then Masterworks may try to sell it through auction houses.

Who can invest with Masterworks? 

Anyone can invest in art with Masterworks, however, its secondary market is only open to U.S. residents. Non-U.S. residents can invest directly in art through Masterworks’ primary market, but the company does not qualify offerings in any jurisdiction besides the U.S.

Public perks and drawbacks

Pros

Pros

$0 commissions on stocks and ETFs and no minimum deposit

Pros

Can invest in stocks, ETFs, crypto and alternative assets in one place

Pros

Social trading features

Cons

Cons

Fewer assets available than some competitors

Cons

Has a short track record

Cons

Limited research tools on fine art

Public is easy to use. Buying fractional shares of artwork can be done directly on the app or website. With no commissions and no minimum deposit, it’s a great way for beginner investors to get exposure to fine art along with investing in the stock market. They also offer a social trading feature, so you can find out what others are investing in, whether that’s comic books, art, or ETFs.

The biggest downside to Public is that their alternative asset collection is still new so they don’t have as much to invest in as competitors. Their art collection is even less and there isn’t as much data about the pieces they offer as other platforms.

Masterworks perks and drawbacks

Pros

Pros

Low minimum investment for fine art

Pros

Masterworks takes care of procurement, storage and insurance

Pros

Extensive data and research on the art market

Cons

Cons

Fees are high

Cons

You have to wait to invest and make an application

Cons

Has a short track record

Masterworks stands out as a place to buy fractional shares of contemporary art. Because fine art is the only thing they focus on, the company has a lot of research and data on the art market. This is a great asset for potential art investors to do due diligence before making an art investment. A lot of their research is available to everyone, so you don’t have to sign up to access their price database.

Masterworks also takes care of procuring and storing artwork, so you can invest without needing to worry about things like storage units and insurance. And if you’re ever in New York City, you can always pop in their members-only office to view the investment pieces.

The biggest drawback is the fee. Masterworks charges a 1.5% annual fee, as well as a 20% commission fee when the artwork sells. This is a lot for an investing platform, but is in line with what you would pay to invest in a hedge fund. Masterworks also requires an application to invest and isn’t as easy to use as other collectible platforms.

Can you really make money on Public and Masterworks?

Investing in art has been a long term investment strategy of the wealthy for centuries. Over the past ten year, the art market has risen 63.3% compared to the S&P 500’s increase of 171.5%. While the art market hasn’t risen as much, it has been growing steadily over the last five years, with art market sales reaching $65.1 billion in 2021 alone, according to Art Basel.

While the art market is on the rise, investing in anything is risky. And even though the art world is not correlated to the stock market, it can have its ups and downs and an artist who is popular today might not be as popular (and worth as much) in a few years. In fact, both platforms caution users that investing in alternative assets is highly risky.

It’s also worth keeping in mind that both Public and Masterworks are still relatively new investing platforms and have only been around since 2017. Since fine art is a long-term investment, neither has a super long track record. Keep in mind that investing is personal and what might be a good investment for one person might not make sense for someone else. If you’re in doubt, it’s best to talk to a financial professional.

How do I make money with Public?

There are two ways to potentially make money on Public by investing in art. The first is buying art shares directly on the platform and waiting until Public sells the artwork and distributes funds to investors. If you go that route, you may need to wait a while until the artwork sells. The other way is to buy and sell shares of their collectible offerings on Public’s secondary offering. It works a bit like the stock market and is open during specific hours of the day. Keep in mind that you may sell at a loss if there is not much demand for your shares.

How do I make money with Masterworks?

Like Public, Masterworks also offers primary and secondary markets for art investors. If you invest directly through Masterworks, you will have to hold onto your shares for at least three years and possibly longer. The company claims it’s outpaced most markets since its inception, with a net annualized appreciation of 15.3%. 

You also have the option to sell your shares to their secondary market. Just keep in mind that since these secondary markets are smaller, there may not be as much demand, so you could end up selling at a loss.

What other people are saying about Public and Masterworks

Masterworks has its own subreddit with 320 members with many comments on current offerings, as well as reflections from members who have been a member for a year or longer. Some of the subreddit comments also reflect a somewhat pushy sales team. On Trustpilot, the company has a rating of 2.8, with many complaining about getting numerous calls and emails or some simply not getting a reply after trying to apply.

On the r/investing subreddit, in a thread titled "is investing in art using Masterworks worth it?"  user captaincanuck93 commented that he finds the business model a bit lopsided but that it’s very similar to how a hedge fund works. He invests with them but noted an art investment might not be best for a retail investor trying to save for retirement.

Public’s collectible offerings are relatively new, as they recently acquired alt investment platform Otis. As such, there aren’t that many comments or reviews on their art and collectible investment offering. Most comments on their 479-member subreddit tend to be around questions and issues relating to transferring money and verification. It has 4.7 stars on the Apple store out of 60,300 ratings, and 4.3 stars out of 44,700 reviews on Google play.

Public vs Masterworks: Which is best for you?

If you’re new to collectibles and are looking for a new asset class to add to your investment portfolio, Public makes it easy to invest. You can purchase fractional shares of fine art along with other collectibles, stocks, ETFs and even crypto. 

Investors who are more serious about investing in art but don’t want to deal with buying art might want to instead look at Masterworks. The advantage of Masterworks is that it offers more art than Public. While both platforms take care of storage, Masterworks also displays pieces at its New York office so you can view your investment in person if you’d like.

Keep in mind that while an art investment might make sense for some, it's not a good fit for every investor. Make sure to do your own research and talk to a professional about whether the fine art market is a good investment choice for you.

FAQs

Is Public.com legit?

Yes, Public is a legit company that is registered with the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). 

What kind of company is Public.com?

Public.com is an investing platform for investors to invest in stocks, ETFs, crypto, fine art, NFTs, and other types of collectibles.

Is Masterworks a legitimate investment?

Masterworks is a legitimate way to invest in art. Each offering on the alternative investing platform is registered with the SEC.

How do you qualify for Masterworks?

To invest in a piece on Masterworks, you must submit an application and meet a minimum investment amount. Individual investors are not allowed to own more than 10% of any individual artwork.

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