Why do you need portfolio management of your fine wine investments? Like all ‘investments understanding a sector and which assets have growth potential, what factors influence performance and when is the right time to buy and sell is key. Being able to identify trends and stay informed to optimise returns is best achieved with a proactive investment portfolio management approach. Even with a stable asset like fine wine, it pays to have a specialist wine investment portfolio manager.
Smart investors work with experts to develop balanced, diversified investment portfolios to manage risk and hedge against negative influences and economic conditions, especially during periods of extreme market volatility. As we start 2021 still in the grip of Covid-19 the need for guidance from experts and to be proactive has never been more acute.
Fine wine is an important asset for diversification due its stable, long-term growth performance and lack of correlation to financial markets, which has made it popular with canny investors and wealth managers guided by an expert fine wine investment portfolio manager to acquire top performing wines. Liv-ex’s recently published Power 100 Report 2020 will provide some insight for investors this year.
Power 100, 2020 – Top 10 Fine Wine Price Performers:
| Price perf. Rank | Brand | Region | Av market price growth |
| 1 | Ca’ Nova | Piedmont – Ialy | 28.09% |
| 2 | Dal Forno Romano | Veneto – Italy | 19.47% |
| 3 | Henri Giraud | Champagne | 18.29% |
| 4 | G.B. Burlotto | Piedmont – Italy | 15.81% |
| 5 | William Fevre | Burgundy | 15.07% |
| 6 | Solaia (Antinori) | Tuscany – Italy | 14.98% |
| 7 | Bonneau du Martray | Burgundy | 14.41% |
| 8 | Rene Engel | Burgundy | 13.12% |
| 9 | Conti Costanti | Tuscany – Italy | 12.98% |
| 10 | Arnoux-Lachaux | Burgundy | 12.82% |
Source: Liv-ex.com, Liv-ex Power 100 Report 2020
A fine wine portfolio should also be diversified and proactively managed. Diversification options for wine investment portfolio managers include brand, region and vintage but extend further to following key wine-makers, critics and other influences. Blue-chip wine investments are still primarily the Bordeaux First Growths Haut Brion, Lafite Rothschild, Latour, Margaux and Mouton Rothschild and this is due to their very strong performance in the secondary market in terms of the volume (liquidity) and value of the transactions in these wines.
Astute portfolio management will ensure that investors combine wines which offer liquidity with those of a similar quality at price points that offer potential for growth and are enjoying growing demand in the market. For example the key wines of Italy and Champagne, which are now mainstream components of a balanced fine wine portfolio, have been some of the strongest performers during the pandemic in 2020. The Liv-ex Power 100 2020 recorded, for the first time, four Italian producers ranked in the top ten most powerful fine wine brands, with only one Bordeaux First Growth listed.
Liv-ex Power 100 top 10 fine wine brands 2020:
| Fine Wine Brand | Region | Rank 2020 | Rank 2019 | Av price growth in 12 months | No. of wines traded |
| Leroy | Burgundy | 1 | 3 | 8.68% | 55 |
| Leflaive | Burgundy | 2 | 41 | 5.99% | 81 |
| Gaja | Italy Piedmt. | 3 | 34 | 7.02% | 65 |
| Sassicaia | Italy Tuscan | 4 | 7 | 9.31% | 32 |
| Penfolds | Australia | 5 | 30 | 3.27% | 57 |
| Ornellaia | Italy Tuscan | 6 | 91 | 9.56% | 34 |
| M&C Dom Perignon | Champagne | 7 | 9 | 3.73% | 56 |
| Ch. Haut Brion | Bordeaux | 8 | 16 | 1.34% | 52 |
| Masseto | Italy Tuscan | 9 | 72 | 5.71% | 23 |
| Louis Roederer | Champagne | 10 | 5 | 2.21% | 37 |
Source: Liv-ex Power 100 Report, 2020 (published January 2021)
The market has broadened significantly by region and the number of individual wines traded on Liv-ex over the last five years and we have seen the rise in wines from Burgundy, Italy and Champagne as essential wines to deliver growth and strong returns to investors. Understanding the changing trends in the market as demand for regional brands and vintages impact on price performance is important wine investment portfolio management to optimise wine investment performance.
Vintage is a key method of diversifying a portfolio. Including prime / mid / off vintages is an important strategy. A vintage rated as Prime (very high average critics’ scores across the region) will generally add a premium to wines, so buying at the right time is important and these wines can be considered pillars of your portfolio. Growth, however can be optimised by selecting excellent wines produced in Mid and Off vintages as they may be acquired at prices that offer value and the potential to maximise returns.
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, as 2020 demonstrated all to clearly. This is where a specialist fine wine portfolio manager is essential and can add significant value to your portfolio.
Whether you are new to fine wine investment or an experienced collector, choosing the right fine wine investment portfolio manager 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 portfolio manager – ask questions and be clear about what you would like to achieve. Ultimately, fine wine investment is an investment you can enjoy and in the current environment could offer a safe haven for capital in very uncertain times.
Fine wine is one of the very few assets that is offering any level of stability and financial predictability during the global pandemic. In this time of extreme uncertainty, there has probably never been a more important time to be looking at de-risking your investment portfolio and speaking to a specialist fine wine portfolio manager.
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