Art funds are a very interesting concept because they are solely interested in the monetary value of the art, thereby they profit from the sales of art, but not in the same manner that a dealer does. Art Funds require less space to show their pieces of art, and have lower costs overall than dealers do. At the same time, Art Funds are entirely dependent on a successful sale of their piece, which may fluctuate based on economic problems in society. However this is not as large of an issue, as this is buffeted by the social value of art. Art demonstrates an elevated status in society, and thus the wealthiest people in society are the ones shelling out millions of dollars to these Art Funds, and these people rarely are that affected by economic change, and thus will continue to purchase art that elevates their social and economic status.
Nevertheless, Art Funds are subject to volatile sales, as determined by the demand for a certain piece. The money an Art Fund makes, is made through resale of a piece of art. Thus, people who manage Art Funds must decide that something is worth more money than it is being sold for, buy it, and resell it at a greater cost. This is always a gamble. One could overestimate the demand for a certain piece, due to either the market already having too many similar pieces, or general indifference to a piece. Thus, in this situation, the best thing to do is to hold on to the piece until demand is increased, however this means no money coming in, and negative cash flow. I believe that Art Funds may decrease the Art Market, because of its solely monetary based nature. This is making it into a consumerist, industrialized market, where there is no appreciation for uniqueness or outlandish art, but only for that which will sell. Also, it puts too much control in the hands of the people who run the Art Funds, because as they have to ability to hold onto pieces until they will be worth more, they will be able to completely control the art market, dictating what is popular at the time.
However, if I were to create my own investment fund, I think the most important thing I could do would be diversify. By limiting myself to a certain area of art, I could be harming my business because it is always uncertain when a certain type of art will become obsolete. By having a diverse portfolio of paintings, photography, sculptures etc. etc. I believe I would have the best chance of success. Also, I would employ the same methods that the Tosca Photography Fund employs in advertising. By garnering press interest in my pieces, I would be more likely to sell them. I also would place some of my pieces in museums or galleries to increase the chance that they will sell by providing a place where they will be exposed to potential buyers. For my art fund, I also would diversify the artists, and their level within the art market. I would buy pieces from already known artists, to demonstrate my knowledge of the art world, and also buy pieces from lesser known artists that are similar to the successful artists I already own pieces from. The pieces from artists who are already successful may not sell for much more money than I paid, however it would be a good way to bring in art enthusiasts, and then introduce them to new artists who have not been exposed yet. It is through the new artists that I will be able to make the majority of my money. I would focus my efforts on whatever art style was most successful, and new at the time. For example, right now I would focus my art fund on pieces that are contemporary, because it is at the forefront of the art world right now, and thus would be easy to find new artists such as Jessica Jackson and Anna Meenaghan.
Pieces by Anna Meenaghan: 
Pieces by Jessica Jackson:
