The Art Of The British Rail Pension Fund Investment Research

The first serious example of institutional investment in art was that under taken by the British Rail Pension Fund,which began investing in works of art at the end of 1974.The original rationale for purchasing works of art must be viewed in the light of the financial and economic conditions prevailing at that time.In 1974,the rates of inflation had up to 27%in the UK.Against this background,the Fund's investment managers concluded the art investment plan.During the acquisition period,which lasted from the end of 1974 to 1980,the Fund invested someï¿¡40 million in a variety of art.ln 1987,the artworks have been sold.As at Dec.2000 it was estimated that the total income arising from the Fund's sales,of its works of art amounted toï¿¡168 million.The overall cash IRR achieved on the sales was 11.3%,or approximately 4.0%p.a.in real terms after allowing for inflation.The art investment of the Fund had got lots of experiences about the operation of the art fund.The works of art acquired by the Fund were initially intended to be long-term investments.The subsequent performance of the art fund vindicated some of its critics,when it achieved its stated objective of producing a real return after inflation.