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Financial advisers drawn to fine wine says new report


  • By alex.sullivan@cliftonmedialab.com
  • News
Cult Wines
A report prepared by Cult Wines, a leading fine wine investment company, concludes that financial advisers would consider fine wine investments to counter volatility of equity dominated portfolios.
One of the key findings was that 66% of financial advisers believe that investor portfolios have become too heavily weighted towards equities in recent years. What’s more, 75% are concerned that these investors are over-exposed to elevated levels of volatility.

In the new report, entitled “Fine Wine versus Global Equities”, analysts at Cult Wines show that during periods of economic deterioration fine wine compares favourably to the performance of global equities.

Over a ten-year period from December 2008 to December 2017 the Liv-ex Fine Wine 1000 – an index tracking the prices of 1,000 wines from top wine-producing regions around the world – experienced less than a third of the volatility of the MSCI World Index, providing investors with greater consistency and more stable returns.

The report also highlights how the performance of the Liv-ex Fine Wine 1000 compares
favourably to those of the FTSE All-Share index and gold futures, both during the depths of the fiscal crisis (2008-10) and during the peak of the economic recovery that followed (2015-17).

Between 2008-10, the Liv 1000 returned a little less than zero, whereas the FTSE
All-Share lost about 25% and gold futures fell nearly 5%. Over the period spanning 2015-17, on the other hand, the Liv 1000 returned 10%, while the FTSE All-Share returned roughly 9% and gold futures 8%.

Piers Cushing, Partner at Plurimi Wealth, said: “While interest rates remain suppressed, ‘luxury’ investments will remain a compelling complement, or even alternative, to conventional asset class investment. This is increasingly the case for fine wine given the scarce nature of the market. With scarcity comes pricing power.”

According to the research, 69% of advisers expect their peers will become increasingly
familiar with the role that fine wine can play in an investment portfolio. However, the report goes on to say that the key to boosting awareness – cited by 82% of advisers – is greater availability of credible performance data comparing fine wine to traditional asset classes.

Tom Gearing, Managing Director of Cult Wines, said: “With global equity markets potentially facing the end of a record bull market, financial advisers are increasingly recognising fine wine’s ability to help investors avoid downside risk. Our report shows how fine wine can act as a defensive asset class in times of economic crisis but also benefit from periods of economic growth.”

“We’re seeing growing demand among advisers for data showing the relative performance
and volatility of fine wine versus equities. Advisers are seeing a role for fine wine beyond a ‘passion asset’ and we expect to see growing interest among everyday investors. We’re optimistic about the future growth of the fine wine investment market. With
the right expertise, investors will have significant opportunities to bolster their portfolios with a stable, defensive asset class.”

“Investors looking to achieve greater diversification benefit from our approach to
portfolio construction, which involves going beyond traditional assets such as Bordeaux and Burgundy by offering balanced exposure to so-called emerging markets like the US, new estates, back vintages and en primeur wine futures.”

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