TUCKED behind London’s opulent Dorchester hotel is a rickety old house, anonymous and uninteresting to anyone other than those looking for it.

Yet this is the headquarters of one of the last business ventures of Lord Hanson, the renowned corporate raider and deal-maker who died two weeks ago.

The company is also rather unusual. Called the Fine Art Fund, it is a mix of art and finance — quite different from the industrial conglomerates in which Hanson was traditionally interested, but characteristically ambitious.

For the past three years some of the world’s best art experts have worked with City bigwigs from Dresdner Kleinwort Wasserstein to give investors an opportunity to part-own some of the world’s best works of art and benefit from their ballooning value.

The idea has attracted a steady stream of Britain’s super-rich as well as their private bankers, advisers and institutional fund managers. The biggest single investment to date has been $10m (£5.4m). Experts will seek out established works they believe are undervalued and look for new trends in art that they think will appreciate rapidly in the global market and use the pooled cash, about $350m, to snap them up.

An added bonus is that investors, either individuals or institutions, can borrow the paintings — including works by Dali, Renoir, Rembrandt and Monet — to hang in their homes or offices.

The fund is the brainchild of Philip Hoffman, an accountant who moved to Christie’s, where he spent more than a decade as finance director. Hoffman, now chief executive of the Fine Art Fund, had been nursing the idea for several years. Hanson was among the first to back him but it took time to convince others that art could be a serious asset class.

Hanson’s elder son, Robert, said: “My father was always a believer in art as an investment and was intrigued by the idea of investing in art through this fund. As always, we looked for the best possible management and put our money where our mouth is.”

Hoffman has gathered an impressive team from the worlds of art and finance to run the fund. It is chaired by Lord Gowrie, a former arts minister under Margaret Thatcher, who is chairman of Sotheby’s in Europe and of the Arts Council in England. Also on the board are Bruno Schroder, whose family owns more than 40% of Schroders, the investment-management firm, Christopher Wright, former chairman of private equity for the Dresdner Bank group, and Edward Schneider, an independent corporate- finance adviser.

Schroder, who collects silver, said: “All investment is only as good as the people selecting it. I have great confidence in the experienced team. Great art has the advantage, too, of being a real asset in diminishing supply apart from being very enjoyable.”

Hoffman is continuing to win positive responses from institutions, private banks and their advisers.

Others have proved harder to convince, however. One private banker who looked at the fund said: “I do struggle to accept that art will generate returns. It strikes me that art is not a serious asset class but a collector’s class.” Another said: “One of our guys did cubic yards of due diligence on the fund and, while I am sceptical, the fund has managed to interest us.”

Hoffman and his team will try to win over such fence- sitters at a Fine Art Fund conference on art as an asset class at Sotheby’s next month.

The fund argues that there is no correlation between art and equities — so it is a good way to diversify portfolios.

“We’re not saying that investors should put all their money into art, but just a bit of it,” said Hoffman. “The sectors the fund will invest in have shown between 8% and 12% compound growth over the past 25 years. Compare this with global equities and you can see that art is an interesting and untapped market.”

Research by Dresdner Bank shows that the value of Cézanne paintings has increased at an average annual rate of 9% since 1874. The bank said investors could have benefited from similiar returns on works by Picasso, Van Gogh, Turner and Canaletto.

The value of art has not been completely lost on investment professionals. In 1974 the British Rail Pension Fund invested £40m, or 2.9% of its portfolio, in the art market. The works, which were sold off at the end of the 1980s, generated 11.3% compound growth. Impressionist art made 21.1%.

Hoffman said the performance of that fund was hampered by investments in smaller, illiquid segments of the market that his fund would avoid.

Now was the time to buy art, he said. “There’s a dwindling supply that we’re focusing on. Given that museums rarely sell their collections, market forces are increasing demand, which will push up prices.”