Art Equity Fund II

Annualized return3

Term3

5 years

Per the amended marketing rules adopted by the SEC, some investment details can only be shown to certain logged-in members.
Status

Closed

Recently funded

Accepting $10,000 - $1,000,000 investments

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Accepting $10,000 - $1,000,000 investments

Overview

  • Invest in a diversified fund of artworks by globally acclaimed contemporary artists featuring works by Alice Neel, Glenn Ligon, Faith Ringgold, and Normal Lewis.
  • The Fund seeks to generate return from appreciation of the underlying artworks over the life of the investment, potentially benefitting investors seeking long-term growth.
  • Recent appraisals of the artworks show all 4 have outperformed initial expectations, with a 6-month update showing a total appraised value 14.3% higher than the total acquisition price.
  • In May 2022, a work by Glenn Ligon sold at auction for 2.1X above its low estimate value.

Performance Update

• View the most recent update for Art Equity Fund II.

Premise

The Fund owns a portfolio of artworks by artists that have achieved an average compound annual growth rate of ~19% since 2008

  • Alice Neel was an American figurative painter most well known for her portraiture. Neel has sold $22.9M at auction for an average price of $335k since 2007, reflecting a 9.7% CAGR (compound annual growth rate), and maintains a strong average hammer ratio of 1.8x.
  • Glenn Ligon is a 62-year old American artist most well known for his hand-stenciled conceptual paintings. Ligon has sold $43.7M at auction for an average price of $456k, a 12.0% CAGR, and has maintained a strong average hammer ratio of 1.6x.
  • Faith Ringgold is a 91-year old American artist most well known for her vibrantly colored abstract paintings and quilts. Her works have sold for an average price of $153k since 2008, a 30.5% CAGR, and has maintained a strong average hammer ratio of 2.0x.
  • Norman Lewis was an American painter most well known for his work focused on social realism and personal expression. Lewis has sold $6.4M at auction for an average price of $474k since 2008, a 24.3% CAGR, and has maintained a strong average hammer ratio of 2.0x.

The art is insured and safely secured

  • At all times, the artworks will be insured by a wall-to-wall fine art insurance policy providing coverage up to the appraised total value for the Fund.
  • Yieldstreet and Athena will maintain possession of all artworks at all times, except when artworks in the Fund are requested to be exhibited, for example by museums, major institutions or other exhibition spaces, as these exhibitions tend to increase the future demand for the works.
  • Prior to purchasing the works, a highly reputable, USPAP (The Uniform Standards of Professional Appraisal Practice)-certified third-party appraiser is engaged to provide fair market value appraisals of the works.
  • Additionally, a conservator will be engaged to evaluate the condition of all works before purchase.

Experienced art manager with works vetted rigorously by industry leaders

  • Investment decisions will utilize third-party appraisals and expertise, supplemented with analysis from a proprietary database managed by Athena Art Finance.
  • Athena has evaluated over $2.5B of art and has funded over $600M worth of fine art investments.
  • The value-oriented approach to asset acquisition is designed to provide a margin-of-safety on each investment.

Artworks created by BIPOC and female artists that have gained wide recognition, and are in high demand

  • According to The All Art-Female (AAF) index, which is comprised of 2,472 repeat sales by 499 female artists, a work by a female artist bought in 2012 would, on average, be worth 72.9 percent more if sold in 2018.
  • During the Fall 2021 auctions across the major auction houses, realized sale prices for BIPOC and female artists not only exceeded low price estimates by an average of 3.2x but also materially outperformed all artists overall at those same auctions (average of 2.5x of low price estimate).
  • Faith Ringgold, another artist featured in the fund, most notably made the Time 100 list of the most influential people of 2022, exhibiting her growing prominence among a wider audience.
  • The infrequency with which works by these artists come to the public auction markets also makes these artworks especially desirable and is expected to result in high demand from buyers at exit.
  • A number of the artists are the subjects of important museum exhibits and continue to be heavily promoted by the most important galleries worldwide, which further bolsters demand for their art.
  • As a result of this strong support from galleries and museums around the world, Yieldstreet believes that the downside risks are meaningfully reduced.

We believe contemporary art is a beneficial investment to hold across all market cycles

  • According to the Artprice 100 Index, blue-chip art has historically outperformed the S&P 500 by over 300% from 2000–2018, based on the most recent data available.
  • When the market turned in 2020 following the onset of the Covid-19 pandemic, the art market outperformed ten major asset classes with Contemporary art achieving the strongest gains.
  • The art market then quickly rebounded and according to Artprice, contemporary works generated $2.9B in sales in 2021 (+49% compared to 2019), highlighting the increase in demand and valuations.
  • This trend was also evident during the Global Financial Crisis (GFC). Based on MeiMoses, the leading art index at the time, from 2007 to 2009, auction prices fell by roughly 27.2% but then recovered to pre GFC levels by 2011. Meanwhile, the S&P 500 fell 57% from its peak and hit a 12-year low in early March 2009. It took until 2013 for the S&P 500 to recover the losses it experienced during the GFC.
  • Art’s historically low correlation to the stock market makes it a viable investment opportunity for investors looking to diversify their investment portfolio.
  • In addition to potentially lucrative returns, art may act as a store of wealth to hedge against inflation and maintain purchasing power.

Essentials

Please refer to the Private Placement Memorandum in the Docs section for more details about this offering.

Capital structure

Where does Yieldstreet lie in terms of priority?

  • The Fund is expected to own the entire equity portion of a portfolio of artworks. The Fund does not expect to employ any leverage.

Cash flow

How do I get paid?

  • Over the life of the investment, investors are expected to receive a target annualized return of 13 - 17%, net of management, servicing and acquisition fees as further described in the Private Placement Memorandum.
  • Principal and returns are expected to be achieved via appreciation of each artwork’s value at the time of its sale, which is anticipated to be within 5 years.

  • As cash flows are received by the Fund from the sale of individual artworks, unpaid fund expenses, reserve amounts, management and servicing fees and annual member expenses are deducted first, and then capital contributions are returned to investors.
  • Next, the remaining proceeds are paid to investors up to a 15% annualized net return on invested capital. Additional remaining proceeds are split between investors (85%) and the Manager (15%). Please also refer to the Private Placement Memorandum.

Slide 1 of 3
  • Returns & Management fees

    Ann'l management fee

    2%

    Target ann'l net return

    13-17%

    Investor share of excess profits

    85%

    Incentive fee

    15%

  • Schedule

    Payment schedule

    Event based

    Target term

    5 years

    Target liquidity event

    Year 3

  • Structure

    Tax document

    K-1

    Offering structure

    SPV

    Expenses

    Ann'l flat expense

    0.25%

Docs

Content

This offering page describes only certain aspects of the offering ("Offering") of the securities issued by YS AEF II LLC ("Fund"). The Offering is made only by means of the Private Placement Memorandum dated January 13, 2022 relating to the Offering (the "PPM"). The information on this offering page is a summary of the Offering, does not purport to be complete and should not be considered a part of the PPM, or as incorporated in the PPM by reference or as forming the basis of the Offering. No person has been authorized to give any information or to make any representations other than those contained in the PPM or in any marketing or sales literature issued by the Fund or Yieldstreet Management, LLC, as adviser thereto, and referred to in the PPM, and, if given or made, such information or representations must not be relied upon. All investors must read the PPM in its entirety prior to investing in the securities.