YCO3: FINE WINES
Wine Investments Have Performed Well in the Last 20 Years
The wealthy person you work for makes their money by investing. Some of that goes on fine wines, classic cars, art… Don’t be fooled. These are investments too.
Let’s look at wine.
Between 1998 and 2018, The Liv-ex Fine Wine Investables Index grew by an average of around 10.3% per year. The FTSE stock market only managed an average around 4.4% per year in that time. Gold performed even worse: an average of around 3.4% per year in that time.
Take a look at last year. Fine wine held its value during the turmoil of 2018, while stock markets were hit badly. The Dow lost 5.6%. The FTSE 100 fared even worse, losing 12.5%. The key wine indices, by contrast, held firm.
The robustness of the value of fine wine shouldn’t come as a surprise. Each vintage gets scarcer each time a bottle is opened and the market (= demand) is growing rapidly year on year. (See the item below on Chinese fine wine demand.) On top of that, as a fine wine matures and improves, its value naturally increases as well.
Chinese Demand for Wine Skyrockets
Global demand and interest in fine wines is increasing at a dramatic rate. Nowhere more so than in China. By 2021, China will be the world’s second most valuable wine market, experts predict.
The impact on exports of wine from the Bordeaux region (the sole focus of the wines involved in this investment opportunity) has been remarkable.
In 2000, China imported fewer than 400,000 bottles of Bordeaux. Today, it imports 80 million bottles and is the world’s leading importer of Bordeaux wines.
Demand in China for wine spikes round about now. Why? Chinese New Year (which fell on 5th February) is when people focus on family celebrations and gift giving. Consequently, a significant share of China’s annual wine buying happens around now.
Benefits of Investing in Fine Wines
Strong returns over the long term, robustness in the face of market turmoil
The Liv-ex Fine Wine Investables Index went up annually by around 10.3% on average between 1998 and 2018. By comparison, the FTSE 100 went up by about 4.4% per year on average and gold in the region of 3.4% per year on average. Even in 2018, when stock markets took a pounding, wine held firm. The FTSE 100 lost 12.5% of its value. The Dow Jones had its worst year since 2008, losing 5.6%. The Liv-Ex Fine Wine Investables pretty much held its value, as did the Liv-Ex Fine Wine 100 and Liv-Ex Bordeaux 500. (Beware: history is no guarantee of future performance.)
Excellent risk management
As you can tell from the above, the value of fine wine has very little correlation with stock market values. It also tends to respond well to economic dips and uncertainty. Fine wine values went up during the 2008 recession and after Brexit was announced. In other words, investing in wine is a great way to reduce volatility in your overall investment portfolio.
WATCH to Learn More about Investing in Fine Wines
Clive talks with Rodney Birrell of The Wine Investment Fund to find out why fine wine been such a good investment in the past.
The Benefits of Investing in this Fine Wine Classic Opportunity
Getting the right wines
This opportunity invests with a wine fund that has scored above average value growth in the wines it has selected to invest in. You might know a good claret when you taste one, but do you know which ones will probably perform best as an investment? We’ve teamed up with The Wine Investment Fund, who have a structured approach to identifying investment-grade wines.
Balancing your risk
This opportunity will invest your money in a range of carefully selected wines, reducing your exposure to value fluctuations. Over time, the fund will also rebalance the portfolio to ensure stability by adding and deleting wines.
Investing in wine through a fund typically costs much less than if you were to invest directly through a merchant. A merchant has costs they pass on to you. A fund’s fees are aligned with you. While there are admin costs, most of the money you pay to a fund for running your investment are calculated based on the profit you make.
Where do you keep the wine? How do you check that the wine is what you ordered? And that it isn’t faulty? We use a fund that takes care of all that and keeps wine in the securest wine storage facility in the world. Guess what? That also keeps the insurance costs down. As a private collector/investor, you’d be looking at much higher insurance costs.
YCO 3: Fine Wine in a Nutshell
We’ve partnered with The Wine Investment Fund to bring you this first YFSOL Classic Opportunity.
The minimum investment is £10,000 for existing Polaris clients and £25,000 for new ones. There is no upper limit.
The investment window for YCO 3: Fine Wine closes on 1st March, 2019. So don’t delay if you are interested.
To participate, you will need to set up a YFSOL Polaris account if you don’t already have one. Don’t worry. It’s simple and you only need to do it once. We’ll help you.
The Wine Investment Fund is set up as a mutual fund company in Bermuda
Portfolios are valued independently by Liv-ex, the fine wine exchange
At will and settled within 90 days
£10,000 for existing Polaris clients; £25,000 for new Polaris investors
Anpero Capital Limited (owners of The Wine Investment Fund)