In times of distress, with most markets tanking, find solace in wine. Literally. It?s not about consumption; entities like wine funds are actually fetching huge returns for their investors. Wine has over the last few years outperformed almost all other asset classes and the London International Vintners Exchange or Liv-ex, founded in 1999, is the leading exchange for fine wine.
According to Andrew Davison, manager of the Vintage Wine Fund, ?Wine funds operate as public mutual funds as well as private funds; we are an offshore (Cayman) public company.?
He claims to have generated returns of 24% in 2006, 25% in 2007. ?Though 2008 has been flat up to now, it is beginning to look better. The prospects for wine investments in an investor portfolio and the industry growth are both looking excellent; we are only at the beginning of a huge growth of interest in the very best wines, especially in countries relatively new to wine such as Russia, Korea, China and India,? Davison told FE.
Clearly, this is the new playground for the affluent. In India, currently, investment bankers or savvy wealth managers get in touch with the vineyards to broker deals and fix the documentation.
The number of trades in this area is also increasing, keeping pace with the number of affluent. ?We get enquries from individuals and wealth managers, wanting to invest with us, on a daily basis,? says Kapil Grover, CEO and founder of Grover Wines.
At the moment, there are no dedicated wine funds in India.
Ask investment managers and UK-based port funds which invest in equity as well as wine. ?An excellent strategy as equity and wine have a record of being negative correlation,? says a wealth manager from the UK.
In India at the moment, this is the prerogative of the affluent. Minimum investment in wine funds is estimated to be around Rs 80 lakh and is expected to go up. And given the new foreign exchange quota of $200,000 for individual remittances, the game is only expected to get exciting!