Smart investors will work with experts to develop balanced, diversified portfolios to manage risk and hedge against negative influences and economic conditions, especially during periods of market volatility. Rarely have we experienced a more challenging environment than that being imposed on us by Covid-19. Fine wine is one of the very few assets that is offering any level of stability, and there has probably never been a more important time to be talking to an expert fine wine investment broker than now.
Fine wine’s track record as a stable, tangible asset which delivers good long term growth and tax efficiency, as any returns are generally exempt from Capital Gains Tax, has seen it recognised as an important tool for diversification. The latest market data available from Liv-ex compares key fine wine benchmarks against the FTSE 100, S&P500 and Gold during the period we have been effected by Covid-19 and a five year term, where fine wine currently outperforms equities and gold.
Liv-ex fine wines indices compared to financial markets & gold:
| Index | MoM | Q1 2020 | 5 years |
| Liv-ex California 50 | Not available | 2.8% | 54% |
| Liv-ex Italy 100 | +0.03% | 0.59% | 38.67% |
| Liv-ex 100 | -1.1% | -1.1% | 24.2% |
| Liv-ex 1000 | -1.4% | -2.7% | 38.3% |
| FTSE 100 | -15% | -26.0% | -17.6% |
| S&P500 | -11.8% | -19.4% | 25.9% |
| Gold | -1.1% | 6.4 | 37.3 |
Source: Liv-ex.com 31.03.2020
As with any investment, understanding how to interpret market data is key to investors. Which investment wines to acquire to achieve optimum performance over a period of time is not generally available and certainly not on offer from your local supermarket or wine merchants, who may give you great advice about food pairings and looking after your wine but rarely have experience in investing in fine wine.
Fine wine investment requires an expert understanding of the market, which like any other, continues to evolve as various factors influence performance. This is where a specialist broker is essential and can add significant value to your portfolio.
An expert fine wine investment broker, like Vin-X, will provide the following important benefits:
- A detailed understanding of fine wine as an investment asset with the ability to interpret market information and identify the best opportunities and guide investors on when to buy and sell investment wines.
- To understand trends in the market and ensure that you are positioned to enjoy liquidity when needed in staple investment wines and to benefit from emerging markets
- Access to the finest investment wines in the world which are recognised as alternative assets – i.e. rare fine wines from a select number of key producers, which are of excellent quality (rated very highly by a few international critics) and with an active secondary market. These can be extremely valuable and supply of wines with excellent provenance is important for fine wine investment.
- Market information – an expert fine wine investment specialist should be a trading member of Liv-ex.com – the fine wine market equivalent of the Stock Exchange. A Liv-ex registered broker, such as Vin-X, will ensure you benefit from the trade data, analytics, information and news which can influence the value of fine wine. They will also monitor key critical reviews, fine wine releases and wine trade, geopolitical and economic information to establish opportunities and possible threats and take corrective steps wherever possible to optimise your investment.
- A fine wine broker will also manage the shipping, storage and insurance of your fine wine. Fine wine acquired for investment purposes should not ideally be stored in your home cellar and never in the kitchen or under the stairs! To guarantee the perfect storage conditions to protect the quality and value of your fine wine, it should be stored in a specialist environment and ideally in a Government bonded warehouse to enjoy the associated tax benefits. That is, in addition to normally being Capital Gains Tax exempt (subject to personal circumstances), wines stored in bond do not trigger VAT and Duty payments unless the wine is removed from bond. Investment wines can be bought and sold and remain in bonded storage facilities. Wines are generally removed from bond to be drunk, not the norm for wine investments. Your fine wine broker will organise all of this for you and act as your intermediary to manage the ongoing storage arrangements and generally afford you a discount on these costs due to the volume they will manage for their clients overall.
- Security – working with the right fine wine broker is very important – there have been incidences of fraud where unscrupulous parties have mis-sold and defrauded investors in fine wine. It is important to select a fine wine broker with an excellent reputation and trading history. Vin-X is a founding member of the Wine Investment Association which was established to protect investors in fine wine. Our systems are market leading and geared to protect investors.
Whether you are new to fine wine investment or an experienced collector, choosing the right fine wine broker is all the same. Do your research – make sure that you select a fine wine investment expert that is a registered member of Liv-ex.com, has a decent trading history and ideally a member of the Wine Investment Association.
Be clear about what you want to achieve in terms of how much capital you wish to invest in fine wine and how long you would like to hold your investment for. Given the very stable nature of fine wine, we at Vin-X encourage our clients to view their fine wine investments as a medium to long term hold to get the best possible performance. Be comfortable with your broker – ask questions and be clear about what you would like to achieve. Ultimately, fine wine is an investment you can enjoy and in the current environment could offer a safe haven for capital in very uncertain times.
Vin-X is a market-leading, specialist in fine wine investment and we would welcome the opportunity to explain the benefits of investing in fine wine to you. For more information call us on 0203 384 2262.