China's Art As An Alternative Asset In Portfolio Management

Art is a new attractive region to investors. In this paper, we discuss the conditions of art market and do empirical research to demonstrate the feasibility of applying China's art in portfolio management.This paper analyzes the operation mechanism of Minsheng Bank's product:"art investment schemes No. 1",and proves that the art market, such as the market's grades and price index system, has gradually matured to provide necessary resources and operational conditions for institutions such as banks and companies engaged in art investment.Through empirical research, this paper calculates the return, risk situation and relevance of art index, stock index and gold index. Then we compare the art portfolio with non-art portfolio. We find that artwork has indeed reduced the risk of portfolio. At the same time, this paper calculates the optimal allocation of portfolio that contains art.Finally, this paper draws a conclusion from the empirical results and thereby gives some suggestions on art investment to the institutions such as banks, enterprises and social security funds.