This week has seen a record price fetched at auction for a work of art. And inevitably, some people are getting concerned where this might lead investors.

Is there a bubble building in the world of fine art? Has the chase for yield reached such a level that people are starting to lose sight of reality? It is dangerous to pose such questions at the present time but hard to avoid getting nervous following the stunning $179.858 million price fetched for Picasso’s Les femmes d’Alger at an auction by Christie’s.

The sale, held in New York, achieved a total in sales of $705,858,000 with sell-through rates of 97 per cent by lot and 99 per cent by value.

Another auction record in its class was Giacometti’s L’homme au doigt (Pointing Man), conceived in 1947 and which achieved $141.285 million. This is a record for any sculpture sold at auction. Of the 35 works offered, two lots sold for over $100 million, three for over $50 million, nine lots for over $20 million, 12 lots for over $10 million, 12 lots for over $10 million, and 29 lots for over $1 million, so Christie’s reports.

It is worth bearing in mind that while the flagship auctions - and their glamourous wares - may grab the limelight, that doesn't mean that the wider art market is moving in perfect lockstep. If it were the case that every other form of fine art moved in more or less the same direction, then some "bubble" fears might be justified. But is that happening?

Such robust figures for leading art auction sales can carry traps. They can, for example, lead investors to think of art as being similar in certain ways to gold: a store of value, relatively easy to move about and store - albeit with certain logistic and technical challenges - and desirable in times of economic stress. However, given the "safe haven" qualities that such things may have, gold is some way off its 2011 record of more than $1,900 per ounce (this took place when fears of Greek exit from the euro were running high), and some geopolitical risks and economic alarms have declined since then, but not gone away.

There is no doubt that if you strip out some of the peaks and troughs of this fine art market – prices slid in the post-crisis period in 2009, for example – there are decent long-run gains to be made, although not always as strong as collectors and auctioneers might hope for. The 6,650 artworks that sold more than once at auction since the late 1960s have generated an average compound annual return of 9.6 per cent, according to Michael Moses, founder of the Mei Moses Art Index (source: Bloomberg). The art market can be opaque in terms of understanding trends – the Mei Moses Index, for example, can only be viewed through a registration paywall on its website, so right from the start, the casual observer interested in plotting price movements on a graph has a challenge. (By contrast, if you want to track auction results for fine wines, you can go on the Liv-ex website, run by the London-based electronic exchange, for free.)

There is a growing body of interest in fine art investing as an asset class in its own right – this publication has held conference events where this has been a lively topic and the techniques of managing collections are regularly discussed here (an example can be viewed here and here.)

The eye-popping price forked out for the Picasso seems to have prompted the international financial advisor firm Chase de Vere to fire out a bit of a cautionary note: “It can be argued that art has a very low correlation to equity markets and so could provide good diversification as part of an overall investment portfolio. However, it is imperative that potential investors understand the downside risks. These investments are unregulated, which means that investors cannot fall back on the Financial Services Compensation Scheme (FSCS) or any other body if their investment goes wrong.

“Investing in art can incur high costs, whether that is fund charges or associated transaction, insurance and storage costs if you’re buying individual works. Many people will also need to pay for specialist advice on what and when to buy,” the firm said. 

It added: “They are also often illiquid so you may not be able to sell when you want and at the price you want."

The organisation goes on to state that artworks don’t produce earnings or income – well, that is the case if a collector doesn’t show these works to the public or rent them out for a fee, as can and does happen.

Chase de Vere says: “So what you get is an investment which is unregulated, illiquid, with high charges, produces no income and with potentially volatile performance. This isn’t exactly appealing to most investors…The downside risks of these assets significantly outweigh any potential benefits and so we don’t recommend alternative investments such as art or any other ‘collectables’ to our clients.”

Of course, it may well be that its advice is broadly sound – for the majority of high net worth individuals, it makes sense to treat art as something in which to take aesthetic delight, rather than think of as a source of profit. There are pitfalls to consider. But in the specialised areas of art advisory and investment that exist, there can be returns to be made for those who have the discipline and resources. If there is a moral to be drawn from the auction result of this week, it is that fine art investment defies easy generalisation.