Masterworks is an alternative investing platform for investors, regardless of accreditation status, to diversify their portfolios with contemporary art featuring famous artists like Banksy, George Condo, and Andy Warhol.
Business Insider compared Masterworks to the best commodity trading platforms and investment platforms. We found it stands out for its access to vetted art investments, which are usually inaccessible to retail investors. However, fees are high and lack transparency.
Pros and Cons
Masterworks Pros
- Artwork vetted through Masterworks' due diligence process
- Potential liquidity through the unaffiliated secondary market
- User-friendly art investment research
Masterworks Cons
- Fine art is a high-risk investment with low liquidity
- High 20% fee on all profits earned
- Website lacks fee transparency
- High $15,000 minimum investment (potential to be lowered when onboarding with a Masterworks financial advisor)
Open an Account
$15,000
1.5%/year plus 20% of profit
- Easy-to-follow investing process
- Masterworks vets each offering/handles due diligence process
- Open to both accredited and non-accredited investors
- Platform is easy to navigate
- Extremely illiquid
- Prospective members have to participate in phone interview to join platform
- Holding periods can range from 3-10 years
- Access hundreds of fine and contemporary artworks that have historically outpaced the S&P 500.
Compare Masterworks
Overview
Masterworks is a global online art investment market offering fractional ownership of pre-vetted postwar and contemporary artworks, allowing retail investors to potentially profit from what is usually an area of the market only available to the wealthy. You don't have to be an accredited investor to use Masterworks.
The Masterworks collections include art created by up-and-coming and well-established artists often featured in museums and art galleries. While Masterworks selects artists with the greatest appreciation potential, art investments pose more risk than traditional assets like stocks, bonds, and ETFs. Masterworks does not offer NFTs.
You make money on Masterworks by buying shares of artwork offerings that appreciate in value once sold. When Masterworks sells artworks at a higher price than it is purchased, it divides the profit among its investors. Since it's a newer platform, Masterworks has only sold 23 artworks so far. The platform aims to buy new artwork every month.
Of the exits held longer than a year, Masterworks has realized an annualized net return of around 20%. Some have returned upward of 75%, while one sale returned less than 5%.
Fine art is generally more risky than other types of investments and overall has low liquidity. If you play your cards right, you may be able to sell your assets for a high price with access to an unaffiliated secondary market. But you're still at risk of losing most, if not all, of your money. Only folks who are knowledgeable about fine art, or who can afford to lose their investment, should invest in it.
Overall, Masterworks is a user-friendly platform that streamlines the art buying and selling process. However, fees can be hard to find, and the initial setup process is a bit convoluted. The investment minimum is $15,000, but a Masterworks advisor can lower the minimum requirement during the onboarding call depending on your portfolio and goals. Financial advisors at Masterworks aren't fiduciaries.
Masterworks is best for experienced traders who don't mind the risk and limited liquidity of investing in contemporary fine art. It isn't the best option for risk-averse investors who want investments with greater liquidity. Also, artworks have a target three to 10-year investment length, but some works have sold earlier than three years. Masterworks can make no guarantee about timing. Exit fees can be quite high.
You can contact and schedule a call with a Masterworks advisor through email or phone. Customer service hours are 9 a.m. to 6 p.m. ET, Monday through Friday.
Masterworks has a rating of 4.8/5 on the Apple Store and 4.7/5 on Google Play.
Ways to Invest
To sign up with Masterworks, you must request an invitation and then fill out a membership application including your personal information and the size of your liquid investment portfolio. Next, you participate in a one-on-one phone interview with a Masterworks advisor to discuss your goals and financial objectives. They will walk you through your first investment. Afterward, you can invest online on your own.
Although Masterworks provides access to financial advisors for questions, advisors don't actively monitor or manage your investments after the initial onboarding call.
Masterworks Fractional Art Shares
Art on Masterworks is pre-vetted. As of Q1 2025, less than 3% of the artworks offered from 24,000 analyzed artist markets are accepted on its platform, as artworks must pass through Masterworks' rigorous diligence process.
The Masterworks research team uses proprietary data to pinpoint the best artist markets and purchase promising works. They purchase artwork through sales from private collectors, auction houses, and established galleries.
Previously featured artists Featured artists include Andy Warhol, Banksy, Carmen Herrera, George Condo, Elizabeth Peyton, Pablo Picasso, and Liu Ye.
Once purchased, Masterworks files the art pieces in an offering with the SEC to securitize them. In other words, it converts artwork offerings into securities anyone can invest in. Individual investors can't hold more than 24.99% of shares for a specific artwork in their portfolio.
After you invest shares of a specific artwork, you must wait until Masterworks sells the painting (targeted three to 10 years) before receiving pro-rata earnings. Once your shares have been liquefied, the funds will be deposited into your account.
A Masterworks account gives you access to research on contemporary and fine art market investment research and up-to-date market data. Datasets show recent sales, annual turnover, and gross artwork appreciation. You cal also schedule a one-on-one consultation with an advisor
Masterworks Wallet Account
You also have the option to sell shares fee-free directly to other users, both in the US and internationally, on the secondary market. However, you must have a qualifying brokerage account to access trading on the unaffiliated secondary trading market. You must also wait at least 90 days after investing in primary shares before being eligible to start selling.
Masterworks doesn't offer a brokerage account directly. Instead, users can open a wallet account provided by North Capital to deposit funds and participate in trading on the secondary market. North Capital is a financial services firm that specializes in providing infrastructure for private securities transactions, especially those conducted online.
Selling early on the secondary market rather than waiting for Masterworks to sell on the primary market can potentially increase liquidity. However, liquidity for assets is not guaranteed.
Risks to Consider
Masterworks alternative investments come with several unique risks. The platform outlines these in its disclosures:
- Unproven business model: Many of Masterworks' features are untested. In other words, success isn't guaranteed. The platform says it may have to auction off artwork if its business model fails.
- Issuers are un-diversified: Investments with single-asset issuers can be risky since you're investing in a single piece of art. In addition, Masterworks says that issuers offering investments in a collection of different art pieces may still only offer limited access to that particular art market.
- Illiquidity: Masterworks issuers aim to hold paintings for three to 10 years. However, there's still a possibility that investors won't be able to liquidate their shares after the holding period, and there isn't a guarantee that all shares will ever be tradable.
- Ability to trade shares: The platform says there isn't an active public market for those who want to exchange their art shares actively. Masterworks also says such a market may never exist and that those using the resale secondary market might either pay excessive fees to resell shares or may not be able to resell at all.
The Important Disclosures tab on Masterworks' website provides more information on the risks of investing.
Masterworks Stone Ridge Art Risk Premium Fund (AARTX)
Financial advisors can invest in Stone Ridge's Art Risk Premium Fund (AARTX), a curated portfolio of over 150 artworks from over 50 artists. The Fund intends to rely on Masterworks to source potential artwork investment opportunities and holds an administrative services agreement with Masterworks. The Fund compensates the Artwork Administrator a fixed quarterly fee, which applies only to the Fund's Investments in the whole of Artwork that will generally be limited to 25% of the Fund's total assets.
There is no secondary market for these shares. In the disclosure for the fund, it states that investors should be prepared to hold shares for an indefinite period of time and that there is no assurance that shares will be profitable.
Fees
Masterworks charges the following fees:
- 20% fee on all profits (not the total sale price) earned when you sell
- 1.5% annual management fee in the form of equity, which covers security, insurance, regular SEC filing, and similar costs
- One-time 11% expense allocation fee for securitization, sourcing, shipping, and management
To start investing, you'll need at least $15,000. Shares are in $20 increments. Masterworks' steep 20% commission can be a significant cut since fine art liquidity can be low.
Trustworthiness
Masterworks prioritizes safeguarding users' personal information and investor data. It regularly employs companywide training. Other security features include industry-standard encryption technology and automated monitoring tools.
All artwork offerings by Masterworks are qualified with the SEC. The filings for each offering can be accessed on Masterworks' website. However, the parent company itself isn't registered or licensed with the SEC.
The artworks Masterworks owns are stored at the Delaware Freeport and UOVO Facilities, which are fireproof, waterproof, and climate-controlled. However, museums, galleries, and institutions can borrow works from the collection with Masterworks On View, an art lending program that allows the public to enjoy these artworks.
The Better Business Bureau gives Masterworks.io LLC an A+ rating. BBB ratings range from A+ to F, and Masterworks has received the highest rating. Masterworks is also a BBB-accredited business, meaning it upholds the BBB's standards of trust for integrity, trustworthiness, responsiveness, and privacy.
Masterworks' record is clear of any major lawsuits or scandals.
Alternatives
Here's how Masterworks compares to similar alternative investment platforms.
Yieldstreet
$10,000
1% to 4%; 1.5% for Alternative Income Fund
- Access to alternative investments, including art, real estate, and legal settlements, that allow investors with plenty of assets to further diversify their portfolios
- Investors receive regular interest payouts over the life of the loan
- Higher-risk investments — best for those with a large amount of money to invest; limited investments available
- Fees may be higher than other types of investment accounts
- Investments are highly illiquid
Yieldstreet is best for experienced, high-income/high-net-worth investors, but folks who don't have six figures to invest in should look elsewhere. Yieldstreet is one of the best real estate investing apps for folks interested in real estate and alternative investments.
Yieldstreet- Consider it if: You're a high-net-worth investor interested in diversifying your investments across real estate and other alternative assets.
- Awards: Listed on CB Insights' Fintech 250 ranking as a Top Fintech Startup
Masterworks and Yieldstreet both offer investable art pieces from top artists. However, the platforms differ regarding investment options, account options, and fees.
In general, Masterworks should be the go-to for art-focused investors interested in fractional ownership of fine art for long-term art appreciation. Compared to Yieldstreet, Masterworks offers a more comprehensive selection of vetted artworks. Moreover, users can increase liquidity by trading through the secondary market.
If you want to invest beyond fine art, Yieldstreet is the better platform offering simple portfolio diversification. It offers a range of alternative investment options, including multi-asset class funds, short-term notes, and debt securities. Yieldstreet also offers artwork-backed loans that provide monthly income streams.
Republic
Republic is another alternative investment platform for accredited and non-accredited investors to diversify their portfolio with startups, crypto, real estate, music, and art. Masterworks and Republic are drastically different platforms for specific investment choices, but both provide assets classified as alternative investments.
Masterworks is best for long-term-focused investors who appreciate art, while Republic best suits those who want to invest in up-and-coming startups. Though Republic doesn't specifically provide art investments, you can use its platform to invest in startups that specialize in art.
Why You Should Trust Us
Masterworks' alternative investment platform was reviewed using Business Insider's rating methodology for investing platforms to examine investment options, ethics, fees, and overall customer experience when reviewing investing platforms. Platforms are given a rating from 1 to 5.
Investment platforms usually offer multiple assets, trading tools, and other educational resources. Some platforms are better for more advanced investors or active investors, while others may be better for beginners and passive investors. Masterworks was evaluated with a focus on how it performs in each category.
Masterworks Review: Business Insider's Overall Rating
| Feature | Insider rating (out of 5) |
| Fees | 3.00 |
| Investment selection | 3.50 |
| Access | 4.50 |
| Ethics | 4.50 |
| Customer service | 4.00 |
| Overall score | 3.88 |
FAQs
Is Masterworks a scam?
Masterworks is not a scam. All of Masterworks' art offerings have been filed with the SEC. However, prospective investors should note that the company itself isn't registered or licensed by the SEC, only the offered securities.
How does Masterworks determine the value of artworks?
Masterworks internally determines the value of artworks using the Fair Market Value appraisal, which is a method frequently used by the IRS. A team of USPAP-certified appraisers and art market professionals evaluates all the components of the artwork, including its condition, the artist behind it, and when it was created.
Can I sell my Masterworks shares on the secondary market?
To sell your Masterworks shares on the unaffiliated secondary market, you must choose "create wallet" in the Secondary Market section of Masterworks' platform. You can only sell your art shares after 90 days from the offering's final closing date.
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