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Should you hedge against rising interest rates with fine wine investment?

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The Bank of England Governor has warned of “a growing case to raise interest rates”. Should you be looking at fine wine investment to protect capital as inflation forecasts grow to be in reach of 5% this year?

Crude oil prices are now at the highest level since October 2018, another factor to add to increasing economic pressures on the cost of living. August 2021’s Consumer Price Index (CPI) level of 3.2% pushed inflation predictions up to 4% and now September’s tanker driver crisis and rising oil prices are likely to add ‘fuel to the fire’.

No doubt, the Bank of England has a delicate balancing act to manage to distinguish between one-off economic factors that may have a temporary effect and those with a longer-term impact on inflation. With some commentators fore-telling a potential 5% level, more than twice the BoE target of 2%, these are challenging circumstances in an uncertain environment.

The combination of rising inflation,  unpredictable economic conditions and volatility in financial markets has many investors looking for stability and the means to protect capital. Fine wine has maintained stable growth throughout the Covid-19 pandemic and is currently out-performing traditional ‘safe-haven’ asset, gold in 2021.

The Liv-ex 100 grew 10% YTD to 31st August 2021, matching the FTSE’s 10.2%,, compared to gold’s decline of -4.7% across the same period. Fine wine has proven its capacity to strengthen and de-risk an investment portfolio in times of economic uncertainty.

For more information see out latest Market Report and speak to a member of our team on 0203 384 2262.