Alternative Investing Report - September 11, 2024

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Around $5 billion was spent on fine art at auction in the first half of 2024, a 29% decline from the first half of 2023. Post-war and contemporary art remained the highest-selling category and saw the smallest decline, at 21%. The amount spent on works by artists born after 1974 dropped the most, seeing a 39% decline.

➨ TAKEAWAY: There has been a slowdown in the art market, as rising interest rates, election year uncertainty and geopolitical concerns have spooked high-end collectors. Next year will be a test, as interest rates are likely to be lower and elections will be in the rearview mirror - if there is no real recovery then, real questions will have to be asked about the state of the market.

Fund managers are buying other funds more than ever in 2024, with the number of deals on track to surpass the record set in 2021, and with the total deal value expected to nearly double last year’s total. The record pace of acquisitions comes as more large alternative asset managers are attempting to give their investors exposure to more asset classes.

➨ TAKEAWAY: Investors are making it clear that they want access to private markets, and asset managers that can offer the most options are seeing more demand. Institutional investors are expected to increase their allocations to alternative assets by 10% per year over the next decade. It is no surprise that traditional asset managers are acquiring alternative asset managers, and existing big players in the private market world are looking to diversify their offerings by acquiring small competitors from different niches.

In this episode of Smart Humans, Slava Rubin talks with Congressman Patrick McHenry about driving innovations in fintech, changing the accredited investor rules, and why crypto voters are going to change public policy.

💵 Private credit ETF: Asset managers State Street and Apollo are teaming up to launch the SPDR SSGA Apollo IG Public & Private Credit ETF, which gives retail investors another opportunity to access the private credit market.

🏡 Florida’s condo market: The median sales price of condos in the Sunshine State fell by 1.3% in July, as rising insurance costs and new condo maintenance regulations affect buying demand.

🎸 Pop culture auction: Sotheby’s inaugural pop culture auction ends tomorrow, and includes a stage-played Prince guitar with a six-figure estimate, and memorabilia from The Beatles, Jimi Hendrix and Oasis.

🪙 Crypto fraud on the rise: There was more than $5.6 billion in crypto-related fraud reported in 2023, a 45% increase compared to 2022, according an FBI report released this week.

🚀 Big biotech fund: Bain Capital Life Sciences raised $3 billion for its fourth and largest fund to date, and will be targeting clinical and commercial stage biotech companies.

🍷 Argentinian wines: While price levels as a whole have been rising for Argentinian wines, upper echelon offerings have seen a drop in global average retail price the past three years, perhaps opening opportunities for investors to buy low.

POL is the native of Polygon, a Layer-2 blockchain built on top of the Ethereum network, most notable for being the network used by Polymarket, a popular betting site with election markets. Last week, Polygon switched its native coin from MATIC to POL in the hopes of enhancing network security and scalability, and there were hopes that the attention could boost the price. However, it seems that people used the opportunity to divest their holdings, and the price has continued the downward trend since it hit its 2024 high of $1.28 in March.