Historically wine has been a lucrative and rewarding investment to hold, this is a non-controversial statement. That the FTSE and other major equities indices have had a great recent run thanks to quantitative easing and loose monetary policy is equally indisputable. However, the period since 2010 to date has seen negative to minimal growth in the wine market; under these conditions does the comparison still hold up in favour of wine as an investment?
Vin-X have produced primary research to confirm that even including recent bull markets for the FTSE and bear markets for wine, on average and over the long term wine still outperforms the FTSE 100 index by a significant margin.
The longest running Liv-ex index (the Liv-x Investables Index or LXINV) has figures going back to 1988 so Vin-X looked at month on month 5 and 10 year holds in both wine, measured by the LXINV index, and the FTSE 100 index to see how they compared. Under examination are 270 discrete month on month 5 year periods for LXINV and the FTSE 100 and 201 discrete month on month 10 year periods.
- There have been 3 negative 5-year periods for the LXINV index since records started. This is just over 1% of the time.
- There have been NO negative 10-year periods for the LXINV index since it started keeping records; the poorest performing 10-year period still showed is 80% growth in the 120 months between May 1996 and May 2006.
- Over the same period the FTSE 100 has had 74 5-year periods, which have seen negative growth, meaning that almost one third of the time, if you invested in the FTSE 100 for a 5 year hold, you would have lost money
- The FTSE 100 has had 31 negative 10-year periods, roughly equal to 15% of the time over the period measured.
So headline figures are still highly favourable for wine, what happens if we look at some slightly (only very slightly) deeper analysis?
Vin-X examined the raw data and produced figures for the average and median (the middle number in a sequence) growth of each asset class over 5 and 10-year periods. When we examine all the results together like this, the return is dramatically in favour of wine as can be seen in the chart.
As you can see, wine still wins, and wins comfortably, even accounting for recent performance. For more information on wine as an investment asset please contact the Vin-X team on 0203 384 2262 or visit www.vin-x.com