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Fine wine combines attractive returns with low volatility, says Wine Asset Managers

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Ever-increasing demand and fixed supply means that wine as an investment offers a unique combination of superior returns and low risk by comparison with more conventional investments, acco

Ever-increasing demand and fixed supply means that wine as an investment offers a unique combination of superior returns and low risk by comparison with more conventional investments, according to a report from Wine Asset Managers, a specialist manager of fine wine funds.

The firm argues that fine wine has performed well as a capital asset compared with equity and fixed income securities, although this very much depends on the wine and vintages selected for comparison.

The report says that since 1950, fine wine investment has produced average annual returns of 15 per cent. Since 1987, the highest average annual return from a fine wine investment over a rolling five-year period is 27 per cent and the lowest is 3 per cent.

Fine wine, unlike other investments, has seen no negative rolling five-year period in the last two decades, and it displays shows low correlation to other investments, especially equities.

The 2005 vintage is widely regarded as one of the finest ever, according to Wine Asset Managers, and is now becoming physically tradable. The firm believes that in the year ahead, renewed buying interest in expensive 2005 wines will haul up older vintages’ prices, which now look relatively cheap.

‘There are some rich pickings to be had for wine investors,’ says founding partner Will Beck. ‘Our report also demonstrates that top-tier chateaux, such as Lafite Rothschild and Ausone, continue to outperform second-tier producers such as Chateau Montrose and Pichon Baron.

‘However, as emerging markets become increasingly knowledgeable about the fine wine market, we expect increasing demand, and therefore rising prices, for second-tier producers in the years ahead.’

Wine Asset Managers, which was founded by Miles Davis and Beck in December 2005, manages the Fine Wine Fund, a membership scheme focusing on joint investment in and ownership of fine wine for qualified investors, and the Fine Wine Investment Fund, an offshore fund that aims to achieve annual double-digit growth through the ownership and trading of fine wine.

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