Blog2Shelly Schwartz, special to CNBC.com     

Managed by a professional manager or advisory firm, they seek to deliver returns through the appreciation and ultimate sale of their underlying assets, which includes paintings, sculpture, photography, video or print.

Some art investment funds focus on investing in art from a certain region, a particular style period as well as a specific medium.

Fund managers must be diligent at trend and market analysis—tracking auction houses, curators and galleries—since their role is to predict when a certain work will peak in value in order to sell for a profit.

In its 2014 Art & Finance report, Deloitte Luxembourg and market research firm ArtTactic found that 76 percent of art buyers and collectors were acquiring art and collectibles for investment purposes, up dramatically from 53 percent in 2012.

At the same time, some 88 percent of family offices and 64 percent of the private banks surveyed said estate planning around art and collectibles is a strategic focus in the coming 12 months. Roughly half of the family offices surveyed also indicated that one of the most important motivations for including art and collectibles in their service offering was the potential role it could play in a balanced portfolio and asset diversification strategy.

Indeed, multimillionaires have a disproportionately high allocation to cash, according to a 2014 survey by U.S. Trust, which found 60 percent of those with at least $3 million in investable assets held between 10 percent and 25 percent of their money in cash.

While all art funds utilize a traditional “buy and hold” strategy, individual funds differ in their size, duration, investment focus, investment strategies and portfolio restrictions, according to the Art Fund Association. Most charge 1 percent to 3 percent of assets in annual management fees and take a cut of profits at the end of the fund’s life, some as much as 20 percent.

By Shelly K. Schwartz, special to CNBC.com
Photo Credit:  John Macdougall | AFP | Getty Images