Osian Art Fund, once a fashionable way to invest in the growing Indian market, has become a prime example of the dangers of speculating in the topsy-turvy world of fine art. Osian was a three-year close-ended fund that began in 2006 as prices for Indian art climbed skyward. Before it closed, 656 unit holders (fund-speak for investors) lined up to pitch in money, swayed by the grand promise of a 30-35 percent return. Unfortunately, by 2009, the market had sunk to its lowest point in years and Osian found itself with a liquidity crisis. Three years later, some investors still haven't gotten any money back, according to the Indian digital finance magazine Moneylife.

News of Osian returning bits and pieces to investors has popped up every so often in the Indian press, but more often journalists have focused on the shortcomings of fund manager Neville Tuli. In the last six months, Osian seems to have come back from the brink, resuming sales activity — the company is at its core an auction house, which jumped on the fund bandwagon during the boom — and paying lip service to paying out investors, at least in part. Its recently concluded a four-part auction series brought in rs 40.9 crore ($7.16 million), with the proceeds reportedly going to fund a reborn edition of Osian’s Cinefan Film Festival, slated to take place this month after a two-year hiatus. But a return to liquidity hasn't reassured those who have yet to see a dime of their principal investment.

One of the investors who has yet to see any of his original investment back is Kamal Mansharamani, who told Moneylife that he was encouraged (along with many others) to join the fund by his money manager at the Dutch-based bank ABM AMRO. He said that has recently been offered payment in installments. “I have been following up with Mr. Tuli for three years now. He has made umpteen promises and broken all of them. ABN Amro also has completely washed their hands off this. They are not helping at all. I believe that a lot of people have got part investment back. I have got nothing,” he told Moneylife.

Mansharamani claims that he is being offered less than 50 percent of his money back, after years of hounding the fund's manager, even though many others have reported returns of at least 70-90 percent.

Osian, in a reply to Mansharamani, claimed that it has taken so long to return the invested capital because of the down art market in 2009. It claims to be taking the ethical high ground — waiting around for the art market to bounce back to sell off the assets that it bought during the boom so as to take fewer losses on behalf of investors. And it's still working on it. According to Osian representative Niranjan Desai, the art fund hopes to complete 20 percent of its overdue payment in mid-August. Another auction, slated for July 31, should help pay off another 20 percent by August 28, after which the fund will provide more information about further installments, hoping to return up to 85 percent of the capital invested. 

The moral of this story? Risky investments are, well, risky.

A version of this article appeared on ARTINFO India.