WSF Sicav Plc’s Wine Source Fund, a regulated vehicle that invests in a diversified portfolio of international fine wines and spirits, has generated a cumulative net return of 32.2 per cent since its inception four years ago.
The fund outperformed industry benchmarks by investing outside the traditional focus on Bordeaux: into other geographical markets as well as spirits.
The performance of the Malta-registered Wine Source Fund in the four years to 31 August compares with the 7.0 per cent return of the Liv-ex 100 and the 15.6 per cent of the Liv-ex 1000 indices in the same period. The monthly performance in August means the fund has generated an unlevered annualised net return of 7.2 per cent a year for its investors since September 2012, when the fund started.
Philippe Kalmbach, CEO of wine services provider Wine Source Group and Co- Manager of the Wine Source Fund, says: “The fund’s performance highlights how we have a unique head start in identifying investment opportunities through our daily dealings with producers and international fine dining establishments. These first-hand market insights led us to fine tune our strategy by investing in select markets and benefiting from favourable price dynamics in an overall quite challenging environment.”
Wine Source Fund’s fully diversified portfolio currently comprises more than 1,000 different wines and spirits from the world’s top producers, mainly located in France, Italy, Spain and the USA. Bordeaux and Burgundy wines, the most actively traded assets in the fine wine market, represent more than 50 per cent of its investments. Spirits account for almost 10 per cent of the portfolio and another of the fund’s early investments was in the Macallan Lalique bottlings of aged whisky at prices that were a fraction of their current values.
Unlike other wine investment funds, about 40 per cent of the Wine Source Fund’s portfolio is made up of assets purchased directly from producers at preferential prices. The wines are stored in selected bonded warehouses so they can age in optimal conditions. Each month the value of these wines appreciates at a fixed rate and the fund sells them at the cumulative index price to fine dining establishments around the world through its affiliate, Wine Source Group.
This mechanism ensures that the fund generates regular and stable returns for investors, who are also insulated from exchange rate risk by Wine Source Fund’s multi-currency hedging strategy. Recent volatility in the sterling-denominated Liv-ex wine indices, triggered by the British pound’s depreciation after the referendum vote, highlight how currency variations can distort the performance of wine investments.
Benjamin Billarant, Co-Manager of Wine Source Fund, says: “The fund has established an excellent four-year track record in generating attractive and consistent returns for investors. A cornerstone of its investment model is a mechanism that guarantees the provenance of wines for consumers, making a positive contribution to the fine wine industry and providing investors with a unique way of making an impact investment.”
