SEBI regulates art funds

The Art Funds have always be in vogue amongst prime investors.

SEBI has issued a statement to regulate these funds. It has specified that only those entities that are registered with SEBI as a Collective Investment Management Company can issue such a fund.

So how do these funds work? Just like any other fund, these funds pool finance from various investors. They invest the proceeds in buying paintings etc (frankly, I do not know what all is included in the art- like for instance, does it include, those statues, clay models etc). These paintings are like the various financial securities (or real assets) in a fund’s portfolio.

Sounds simple? Not really as these are highly illiquid securities. Moreover, unlike other assets, these art securities are limited and much depends on the reputation of the painter. So the market is very limited and is at best left to those who have a lot of money to spare.

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