WEALTH manager Citadel yesterday announced the launch of its Citadel art price index - a first in SA - with the aim of increasing interest in more diverse asset classes as European debt concerns continue to weigh on traditional investments such as equities.

The launch of the index is another sign of institutional interest in the art market, which has continued to set new price records. The latest is R21m paid for an Irma Stern painting at an auction in Cape Town this week.

However, the index has run into criticism in the art world, with Joburg's Everard Read Gallery owner Mark Read describing it as "a negative" that "makes me suspicious, actually".

Stephan Welz, MD of auctioneers Strauss & Co, said yesterday that while the value of an artwork "was not the reason the painting was painted", indices were a "reality of life today".

Citadel said it had put the index together taking into account art sales at auction over the past 10 years. "Citadel partnered with Econex, a leading independent economics consultancy, to develop a robust model for the index, which will provide accurate information over time. Econex used data collected by art assessment company AuctionVault since 2000," the company said.

Citadel CEO Neil Brown said it was important to "lift Citadel's understanding of art to the level of our proficiency on the more traditional asset classes" as many clients had invested in art.

Joe Bester, Citadel's head of marketing, said "over the past 12- 18 months we've noticed a definite uptick in passion investments such as art, wine and race horses". Factors behind this were "the volatility of the equity markets" and the "perception" that art as an asset class "retains wealth better".

But Mr Read said the index "almost debases art. I'm sure some dealers will be rubbing their palms with glee, but it's not the point. Art should be made because people are compelled to make it, and it should be bought because people are compelled to live with it. It can't be reduced to the same level as stocks and shares."

Mr Welz said the index "may not compare apples with apples", because the hammer price used in the index did not take into account varying transaction costs.