An article by the FT’s Wealth correspondent, Hugo Greenhalgh, this week puts the spotlight on asset classes categorized by HMRC as ‘wasting’. Not only do they provide the appeal of Capital Gains Tax exemption, granted by HMRC’s classification, but they also provide outstanding returns.
Greenhalgh’s article boldly states that “Classic cars and fine wine leave Warren Buffet trailing”. He compares the average returns from investment in classic cars to Buffet’s Berkshire Hathaway investment vehicle over the last ten years since 2005 and the classic car seemingly leaves BH standing!
Classic cars are currently seen as a ‘safe investment’ with more than 5,000 (total value $1.2bn) traded in the last 12 months. Even ex-pensions minister, Steve Webb joked about people being free to spend their pension pot on a Lamborghini with the recent change in legislation!
The fact is the performance of luxury assets and the returns they provide is now well documented. Knight Frank publish an annual report surveying the investment activities of Ultra High Net Worth Individuals around the world. The report includes their Knight Frank Luxury Index looking at the price growth of luxury assets including cars, coins, jewellery, art, property, gold, fine wine and a few other classes.
The article reports fine wine having had a good decade (2005 – 2015), up 243 per cent more than art at 239 and coins 232 per cent respectively. In the trade we know in fact wine has had an extraordinary four-year run of relatively flat growth following the market decline post 2011. Looking at our own recent findings when comparing wine to gold, equities and property, over five and ten year cycles, this negative period is even more extraordinary and against trend over the long term. Our view is the only way for wine is up and would stress again now is the perfect time to be bolstering your wine portfolio with blue-chip stocks for future growth.
Should you also wish to download our FREE Vin-X Market Report comparing the performance of fine wine with equities, gold and property.
Contact us on 0203 384 2262 for our current view on the market and for further information on the wines that would most suit your investment portfolio.