That said, the Art Trading Fund might not be the best vehicle to profit from a rising market either. The fund will carry hefty fees—a 2 percent annual management fee and a 20 percent charge on investment performance—and rapidly buying and selling the art will drive up transaction costs, especially since auction houses and dealers already lard the process with fees of their own.

Nor will such a fund be an easy sell in alternative investment circles. Institutional investors, for example, would probably have trouble slipping this type of fund through their investment committees.

In addition, many investment advisers would worry about putting clients' money in something they themselves have a hard time understanding.

"This certainly qualifies as an alternative investment," says Joseph Aaron, of Wood, Hat & Silver LLC, a San Francisco firm that invests in hedge funds for individuals and institutions. "But I suspect it is a tad too alternative for traditional portfolios."

Even art market players with experience in more traditional art investment funds are skeptical. William Pearlstein, a well-known art investor and art market lawyer with New York-based Golenbock Eiseman Assor Bell & Peskoe is among those who believe investors can still obtain top pieces of art that "will garner the esteem and praise of peers," while not breaking the bank.

Pearlstein is also an experienced hand at art investment funds, having been an investor in one that imploded last year. The fund, Fernwood Art Investments, was launched in 2005 with great fanfare. It was shuttered more quietly in 2006 amid charges of mismanagement, and it is now the subject of several investor lawsuits, including one joined by Pearlstein.

Although Pearlstein still believes in the concept of art investment funds, calling Fernwood "a good idea" that succumbed to "flawed execution and garden-variety human frailty," he is circumspect about the quick-trading and commoditization of art embraced by the Art Trading Fund.

"The art market isn't a stock market," he says. "People who buy art are generally collectors or connoisseurs of a particular kind and there aren't millions of them with a taste for a particular artist, so I'm not sure about this idea of slipping in and out of pieces. There is not a lot of liquidity short-term."

Of course, the Art Trading Fund could still become a roaring success for its principals if a few well-heeled investors buy into the idea. With so much money chasing returns, all it takes is "a narrow inch of the world to get comfortable with it," says Pearlstein, then it's off to the races.