Fractionalisation

Fractionalisation is the process we use at Mintus to give investors the opportunity to invest in high-value art.

Fractional Art Ownership

Through a company structure, individuals are able to buy shares in iconic artworks that might otherwise be out of reach.

Read on to discover how fractional ownership works, the benefits of fractional art investing, and how it is changing the way people invest in high-value assets.

What is Fractionalisation?

Fractionalisation refers to the division of a large asset into smaller portions, allowing investors to own a fraction of the asset instead of the entire item. This concept is especially relevant in alternative investments, such as investing in artworks, where the cost of a single piece can be prohibitively high for individual investors.

While the cost of a multi-million-pound artwork may seem out of reach for many individual investors, fractional ownership provides a more attainable option for those interested in investing in high-value assets. By allowing investors to own just a portion of the artwork, fractional investing makes it possible for a wider range of individuals to invest in iconic masterpieces and benefit from their appreciation over time.

How does fractionalisation work at Mintus?

Mintus sets up each artwork as a company structure. When an investor buys shares in a painting they are buying part of a company, just like traditional equities. The difference is this company’s value is determined by one asset- an artwork.

By using a company structure, investors have access to multi-million pound artworks for a fraction of the cost. This structure also means investors' assets are ring-fenced from Mintus and in the worst case scenario of Mintus’ insolvency, each company has a Board of Directors that will see out the lifetime of the investment.

What are the benefits of Fractional Ownership?

Fractional ownership offers several benefits for investors:

  • Affordability & Accessibility: by dividing the cost of a high-value asset into smaller portions, fractional ownership allows a wider range of individuals to invest, making it a more accessible option.
  • Diversification: fractional ownership allows investors to spread their capital across a range of assets, reducing their overall risk and diversifying their portfolios.
  • Liquidity: fractional ownership offers greater liquidity compared to investing in an entire asset, as it decouples an individual’s investment from the overall investment. Mintus will enable this by operating a secondary market, in which investors will have the chance to sell their shares to other qualifying investors.
  • Professional management: through fractional ownership, investors benefit from expert knowledge in the management and administration of their investments. At Mintus, investors do not need to worry about the storage, insurance, maintenance, or sale of the artwork. Our team takes care of everything, from sourcing to sale.

What is the difference between fractionalisation and tokenisation?

Fractionalisation and tokenisation are two distinct concepts in the world of alternative investments. The key difference between fractionalisation and tokenisation is the method of investment: fractional ownership uses traditional financial instruments such as physical currency, shares and contracts, while tokenisation involves the creation of digital tokens that takes place on a blockchain platform.

While both fractionalisation and tokenisation serve to increase accessibility and liquidity in alternative investments, fractionalisation offers a number of unique benefits, such as providing investors with a more established and tangible connection to the underlying asset and a sense of stability and reliability.

Ultimately, however, the choice between the two concepts will depend on individual investor preferences and priorities.

The Art of Fractional Investment

There are many alternative assets available for fractional investment that offer unique opportunities to invest in passion projects and different markets.

One such alternative asset is sports memorabilia, including jerseys, mitts, trading cards, and ticket stubs. However, the market for sports memorabilia has been hit hard in 2022, with many assets trading at less than half of their initial public offering (IPO) value. This lack of a proven track record and potential for negative returns has raised concerns about the health of the sports memorabilia market.

Another alternative asset that has become more accessible through fractional investing is real estate. While the average person may find it difficult to invest in physical property, fractional investment platforms like Here and Futurent offer investors the opportunity to invest in vacation homes, farmland, and even digital property, such as land in virtual worlds like Decentraland.

Luxury goods, such as Hermès bags and jewelry, are another asset class available for fractional investment. The market for second-hand sneakers, particularly those worn by celebrities, has exploded in recent years, with some pairs selling for millions of dollars. While this promises high returns, the lack of infrastructure to verify product authenticity and a relatively short track record for the market have raised concerns about potential fraud and eroded confidence in the market.

The art market on the other hand, had a great 2022, with a record $7.5 billion worth of total auction sales of Old Masters, Impressionist, Modern, Post-War, and Contemporary Art at Sotheby’s, Christie’s, and Phillips. That props up the truism that art is a safe haven in times of economic uncertainty, and suggests that high-quality artworks are still a good long-term investment.

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