Fine Wine Investment Performs Well
Published: 1 March 2012 By Julian Stone Leave a Comment
Investors of the Wine Investment Fund (TWIF) 2006(3) Tranche have received returns equivalent to over 10% p.a. over the last 5 years, a better return than via the FTSE over the same period.
The Wine Investment Fund (TWIF) announced its latest pay-out as its 2006(3) Tranche matured with investors receiving returns equivalent to an average of +10.04% p.a. over the last 5 years.
The FTSE fell by 0.03% p.a over the same period
After all fees and all trading, insurance, storage and other expenses, the average return of all paid out TWIF Tranches over the 9 years since inception in 2003 is 14.7% p.a.
These returns have been generated in a period which spanned two of the only three previous bear markets in fine wine in the last 25 years – 2008 (the credit and banking crisis and the collapse of Lehman Brothers) and 2011 (the Eurozone crisis and the possibility of a European government debt default and/or the break-up of the Euro).
TWIF’s recognised fine wine investment team has over 80 years of combined experience which is brought to bear analysing the fine wine market, trading its wine stocks at the most advantageous prices and managing its investors’ monies. The results speak for themselves.
Andrew della Casa, Director, The Wine Investment Fund commented: “TWIF’s returns are linked directly to our risk management procedures. To give just one example, our portfolios now include a lower percentage of Château Lafite (typically some 10-15% against 25-30% in the main wine market index, the Liv-ex 100).
“Our holdings were reduced from 20-25% towards the end of 2010 following the large rises in the price of Lafite in 2009-2010 – a process we undertook to reduce risk. These investment decisions proved to be justified in 2011 when Lafite was much the worst performer of the main Bordeaux châteaux, falling some 30%.
“TWIF also avoids younger wines, which tends to be more volatile than more mature vintages: hence it has not suffered at all from the recent 45% fall in Lafite 2008.”
Fine wine prices fell by 15% in 2011 as the market corrected from the sharp rise of 76% since the end of 2008.
At the start of 2012, TWIF predicted that the main wine index (the Liv-ex 100) would finish 2012 10% above its 2011 year-end level.
To the end of February, it has risen 3.0%.
TWIF believes that now may be the most advantageous time to buy into the market since January 2009. This is on the basis that history may be repeating itself in that the only two previous bear markets for fine wine in the last 25 years (1998 and 2008) saw the market hit a low point in December and recover sharply the following year.
MoneyHighStreet comments: “Clearly many investors are looking at wine investment as a good alternative asset to diversify or boost their returns. The wine collectables market though is highly specialised, should it be Burgundy or Bordeaux for example? One option is to consider investing in a fund.
“If investing in your own wine collection, be aware of the cost and complexities of storing it. If it is stored incorrectly it could be rendered worthless. It is unlikely that your standard home insurance will cover your wine collection and you will need to make sure you protect your investment with suitable insurance cover.
It may be well worth looking at a specialist or high net worth home insurance policy – get advice from an insurance broker if need be.
“Please remember too that the value of wine can go up as well as down – albeit if prices do fall at least you do have the potential to drown your sorrows by opening a bottle or two!”
Fine wine investments are not regulated under the Financial Services Act 1986.