Are fractional shares the future of investing?

This article was first published on LinkedIn. Subscribe to Errol Izzet's 'Money Movers and Shakers' newsletter to read his articles as soon as they are published.

With the cost of living currently sky-rocketing, people in the UK are becoming more actively aware of their income and expenses, and beginning to explore other routes of income that can help alleviate the stress of the increasing costs of everything. Investment has always been a popular way to generate income, and whether you invest in stocks, businesses, property, or “emotional” assets like art or luxury goods, it is down to what you are comfortable putting your money towards, and where you feel your skillset and knowledge sits. Something that has caught my eye recently and is an upcoming method of investment that is open to a wider range of people is fractional shares.

So what are fractional shares?

Instead of outright purchasing an “emotional” asset – say for this example we are talking about Claude Monet’s ‘Water Lilies’ – you can split the cost of the asset between a set number of people, and own a share of the asset. So with the Water Lilies artwork, instead of paying $70.4m to be the proud owner, you could potentially invest $10,000 and own a percentage of that artwork. When it comes around to sell at auction, you will gain income from that sale (less the pre-agreed fees and cut taken from the third party organiser of the fractional share). The platform Showpiece has been gaining a lot of interest and has piqued mine in the process. One of their current available pieces is Andy Warhol’s ‘Reigning Queens’ print, which you can invest in a share for £100 up until the beginning of October when the ‘buy-ins’ close. The great thing about these fractional shares is that you can sell your share to other collectors on your provider’s platform, so if you decide you’d like to pass your share on and start a new investment, you can do that without having to wait for the piece to sell. Being able to buy fractional shares for a reasonable amount could become a game-changer in terms of adding long-term investments into your income for a lot of people, with these previously unattainable investments now being bought into the hands of many.

So, where do International Payments come into this?

Showpiece isn’t the only site offering a service like this. However, a lot of these sites are from abroad, with Masterworks being a powerhouse of fractional shares in the US. Obviously, no two platforms can own the same artwork, vintage piece, or sought-after collectable at the same time, and this is why it is important to keep your options open when investing. If you have a piece in mind that you would like to invest in, but the investment requirement is not in Sterling, that’s where myself and my team of account managers at Caxton come in. I can help you with your investment by ensuring that we can work to get you the best rate and make the most out of your investment. We can also help you arrange your return payment when the item sells at auction, ensuring that your rates are the best they can be, making your investment well worth it.