Lloyds Wealth Management Study: Passion investors in fine wine expect 48 per cent returns

Peter ShakeshaftA new study by Lloyds Private Banking canvasses 500 UKretail investors with a minimum of £50,000 invested in traditional and/or alternative investments.

Some of the most popular investments include alternative assets, which range from classic cars to racehorses and fine wine.  The research found that investors will, on average, spend £13,500 on a single item with as much as 10 percent of investors willing to spend up to £50,000 on a collectible.

FerrariJewellery is reported as the most popular, however the asset attracting the highest unit investment is still classic cars with an average of £34,500 per vehicle but the potential to cost many multiples more.

Fine wine was ranked in the report as the seventh most popular “Hobby Investment” with a current average spend of £20,300 and the highest levels of returns expected in the long term at 48 per cent. In the medium term classic cars are thought by the investors to provide better returns at 41 per cent.

The average spend reported is interesting as there aren’t that many cases of wine currently on the market with a price tag which would generate an average of £20,000 – so this may well be the average wine portfolio value rather than single case of wine but of course with some rare wines prices paid and achieved by sellers can be in the six figures.

DRCLloyds’ report recognizes that some investment may have been driven by sentiment or passion and a lesser percentage by purely financial performance.

Markus Stadlmann, chief information officer at Lloyds Private Banking, said: “In investment terms, work and play do not need to be mutually exclusive, and with the right investment approach it is possible to make your interests pay.”

“Often tangible assets, such as a painting or a timepiece, retain their value and are not eroded by inflation. Over the long-term, these types of assets do not closely correlate with more traditional equity and bond markets, and therefore offer diversification opportunities. Investing in something you enjoy is a great way to make your portfolio unique to you.”

Lloyds Wealth Management’s study supports our view that alternative assets such as fine wine do have a place in a well-diversified investment portfolio and if you can be passionate about it as well, all the better.

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