When it comes to returns on investment, wine investing has turned out to be competitive when compared to stocks. According to The Sotheby’s International Realty 2023 Luxury Outlook report, “As stocks and bonds and most asset classes were down sharply through mid-October 2022, wine investors were enjoying healthy returns: The Liv-ex 1000index, a wine benchmark that includes the most widely traded wines, was up 14% through mid-October, while the S&P 500 was down 24% and the S&P U.S. Aggregate Bond Index was down around 14%.” In fact a 2015 academic study from Vanderbilt University, HEC Paris, London Business School. and Cambridge Judge Business School found wine has returned an average annual 8.5% for the past 120 years.
Wine investing has always been a popular investment option for investors looking for alternative asset classes. Investments in wine can provide significant returns over the long term and are a wonderful way to diversify your portfolio. It’s critical to comprehend the various wine investment options, like buying individual bottles, purchasing stock in businesses involved in the industry, or creating a portfolio utilizing platforms such as Vinovest, Cult Wine Investment, Vint, and Acker Merrall & Condit. These investment platforms provide diversified portfolios, entry levels ranging from $100 to $10,000, and eliminate many complexities and logistical challenges.
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Wine investment options differ in their structure. Additionally, you should be aware of the substantial initial outlay required to launch a portfolio and the ongoing expenses related to wine investing. Also, it’s crucial to keep in mind that wines need time to increase in value and that investment-grade wines need to meet specific criteria in order to be regarded as wise investments.
“We build a portfolio of individual bottles. You can get exposure to different bottles and regions. and choose an investment period usually of three to five years, five to 10 years or 10 to 15.” says Anthony Zhang, Vinovest co-founder and CEO.
Through mid-October 2022. the average Vinovest wine investment returned 14%. Zhang says. Top performers in the fund’s portfolio were Krug Vintage Brut 2008 with a 21% gain and Demaine Dujac Bonnes-Mares Grand Cru (2015). which surged 38.4%.
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Yet another structure is run by the London-based Wine Investment Fund. Founded in 2003, the fund focuses on Bordeaux wines and notes on its website, “investments may be redeemed at any time.”
Each fund and platform comes with its own minimum investment holding periods, and fees, so a careful look under the hood is a must. Fees can be high: Wine Investment Fund charges a 1.5% annual fee plus 20% of profits. Vinovest’s annual fee ranges from 2% to 2.85%, but doesn’t dip into profits. Zhang notes that fees include storage and insurance, “as well as ongoing advice and help selling within their target window.”