Diversification Reconsidered: Where premium art fits into the modern portfolio

Investors face a dilemma.

Most portfolios appear diversified on the surface.

Stocks, bonds, real estate and alternatives all play a role. But during periods of stress, these assets often move together at different rates because they share common exposures: interest rates, currency risks, and policy decisions.

That’s why sophisticated investors are increasingly looking for assets that:

• It is not only related to corporate profits or cash flows
• It does not depend directly on the results of monetary policy
• Trade in global markets rather than one local system
• Structurally rare

There is one asset class that has traditionally been the exclusive domain of institutions and the very wealthy that today’s investors have added to their portfolios through fractional investing.

Blue art.

See full disclosures about Postwar Art, Contemporary Art, and Historical Deflation below.

The role of art in preserving and growing wealth

Excellent art has been a store of value for centuries. They are in limited supply, demand is global, and their prices are largely dictated by financial markets.

Art has historically proven:

• Low correlation to common stocks, bonds and other popular markets
• The ability to withstand certain inflationary and deflationary periods
• The ability to maintain real purchasing power over long horizons

The postwar and contemporary segments have generally outperformed the S&P 500 from 1995 to 2025.

For these reasons, art has long been owned by families, foundations and sovereign capital, as a complement to their financial assets.

The limitation was never the asset itself. It was access, liquidity management and professional execution.

How artworks make art investable

Masterpieces It aims to address those challenges by structuring art as an investable asset class.

The platform sources museum-quality works of art by established artists with a proven track record of public auction sales and historical high prices. More than 500 works have been launched on the platform so far, featuring artists such as Banksy, Basquiat and Picasso.

Each business is offered to investors through SEC-qualified offerings. Investors buy shares rather than entire businesses, allowing portfolio-level allocation rather than concentrated exposure.

Masterpieces Manages:

• Acquisitions and due diligence
• Insurance, storage and exporter
• Continuous market analysis
• Executing the sale when conditions are right

When a lot is sold, the proceeds are distributed to investors proportionately, net of fees.

For example, investors have seen representative annual net returns such as 14.6%, 17.6%, and 17.8% on businesses held longer than a year.

This structure allows art to function as an institutional asset class, rather than a discretionary or emotion-driven purchase.

Where art fits in a portfolio

Art is best understood as a long-term illiquid allocation designed to improve overall portfolio efficiency.

What it offers is:

• Exposure to rare, globally priced real assets
• Reduce reliance on equity and rate-based results
• Variable return flow over the full market cycle

For many high-net-worth investors, art represents a modest single-digit percentage alongside stocks, credit, real estate and private assets.

Who is this designed for

Masterpieces Intended for investors who:

• You already have significant exposure to traditional assets
• Focus on building a long-term portfolio
• Understand the role of alternatives and real assets
• Capital can be committed patiently

It is not designed for short-term trading or speculative capital.

Allocating art is not a bet on market collapse or currency failure. It is a recognition that portfolios benefit from assets that behave differently, especially during periods of uncertainty.

Investors can explore current offerings, review historical performance data, and determine if a fractional technical investment aligns with their broader financial strategy.

Click here to invest in art with Artworks

_{Investing involves risks. Past results are not indicative of future results.}

_{Masterworks is providing this communication as an agent for the issuing entities, and not Masterworks’ advisors. The content does not contain legal, tax or investment advice or personal recommendation. Masterworks is not a broker-dealer licensed by the SEC or FINRA.}

_{Masterworks can only make and accept sales after an offering statement has been filed and “qualified” by the Securities and Exchange Commission. Any offers may be canceled prior to notice of qualification. Indications of interest do not imply any obligation. For additional disclosure, visit the offering documents filed with the SEC and Important Disclosures at masterworks.com/cd.}

_{Estimation and Art Correlation data are based on Masterworks’ internal analysis of the Repeated Sales Index of Historical Art Market Prices calculated on a value-weighted basis and a focus on the category of Post-War and Contemporary Art (as determined by the applicable auction house using Standard & Poor’s CoreLogic Case-Shiller House Price Indices methodology). Standard & Poor’s CoreLogic Case-Shiller home price index methodology results in a value-weighted index. Auction results achieved in a currency other than the US dollar have been converted using exchange rates provided by FRED (St. Louis Federal Reserve) at the time of the last sale. This adjustment is made to take into account long-term exchange rate trends that would distort the appreciation of works of art. The quarterly index is calculated internally on a rolling basis, including recurring sell pairs from the previous five quarters in each quarter. The rolling quadrants accommodate the scattering of data resulting from the seasonal nature of the art market. The S&P 500 represents the total return of the S&P 500 (Yahoo Finance). The 10-year bond yields are based on US bonds (Bloomberg US Aggregate Bonds) and are provided by Bloomberg. All data are calculated from 12/31/1995 to 12/31/2024. Choosing different inputs or time periods for the art index may yield different returns.}

• _{“Post-war art, contemporary art, and historical stasis” | The figures reflect the 25% and 11% compound annual growth rate of the contemporary art market in the post-war period following the decline in art prices. Deflation is defined as any sustained period of decline that results in a cumulative decline of more than 10%. The compound annual growth rate is calculated from the bottom of one recession to the beginning of the next.}
• _{“Historical Art Appreciation – After Decline” | It takes into account all years outside of “recession periods” and calculates the average annual appreciation rate. This results in a typical growth rate of 13.3%.}

_{“Net Annual Return” means the annual internal rate of return, or IRR, net of all fees and costs, to holders of Class A Shares of the Initial Offering, calculated from the final closing date of this offering through the date of sale.}

_{Individual Retirement Accounts (“IRA”) are subject to specific tax treatment by the Internal Revenue Service (“IRS”) and contributions, earnings, and withdrawals may have tax implications. It is your responsibility to understand and comply with IRS regulations regarding individual retirement accounts, including, but not limited to, eligibility criteria, contribution limits, and distribution rules. Section 408(m) of the U.S. Internal Revenue Code treats the acquisition of any collectibles, including any work of art, as a distribution of is taxable to the account holder and may be subject to early withdrawal penalties of 10% of that amount if the investor is not at least 59 years of age. The IRS may take the position that an investment in Masterworks Offerings is equivalent to the acquisition of a work of art, which is collectible, and therefore should be treated as a taxable distribution. Masterworks can provide no opinion, guidance, or advice regarding the IRS’s potential interpretation of Section 408(m) as applied to Masterworks Offerings, and urges investors who… seeking to use their IRA to invest in Masterworks Offerings to consult with a competent tax professional before making an investment decision The decision to open and fund an IRA is a self-directed action and does not constitute an advisory recommendation by Masterworks Advisers nor a solicitation of the Masterworks Platform or any Masterworks affiliated entity, nor has any Masterworks affiliated entity provided guidance regarding establishing or funding an IRA, and you assume full responsibility for all of the following effects and results of investing through this method.}

_{The SEC’s “qualification” means only that the issuer of those shares may sell the securities described in the offering statement. This does not mean that the SEC has approved the merits or passed on the accuracy or completeness of the information contained in the offering statement.}

_{Masterworks, LLC is located at 1 World Trade Center, 57th Floor, New York, NY 10007.}

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