In response to global equities falling significantly in value in the past week, following the widespread outbreak of coronavirus, Cult Wines has published a new statistical analysis showing that wine, as an asset class, provides diversification, reduces risk and enhances long term returns as part of a multi asset portfolio. Tom Gearing, Managing Director at Cult Wines, says: “It is clear that the coronavirus is having an unprecedented impact on global equities, the likes of which we have not seen since the financial crisis over a decade ago. With equities falling by a fifth in value in the past week, it more important than ever that investors adopt a pragmatic approach to their investments, having in place a diversified portfolio to cushion against violent market developments.
“Our data clearly shows that throughout the financial crisis, between November 2007 – November 2009, the Liv-ex 1000* consistently outperformed the MSCI World Index.
Moreover, in the long-term, the inclusion of fine wine reduces risk and provides diversification benefits to a portfolio and among other alternatives, such as commodities and real estate, delivered a similar level of return but with much lower volatility.
“While we cannot foresee how far-reaching the current sell off will be, we believe the demonstrated past resilience of fine wine and its ability to deliver uncorrelated returns over the long term, make it a very strong candidate for opportunistic buying, should prices suffer from rippling effects.”