Wine Investment can Provide a Rich Flavor to your Assets
With the clumsy stock market progress in the past few years, many investors are looking for alternative investment options. Wine is among the rising choice of investors in the past few years. The biggest surprise and strength of wine investments was revealed last month when Goldman Sachs Group Inc. (GS) agreed to accept 15,000 bottles of fine wine as collateral for a loan issued to a former high ranking executive. Most of these wines consist of the finest wines from Burgundy and Bordeaux. The officials explained all of these wines to be the best in their range including first growth wines from Bordeaux and top premier cru/grand cru from Burgundy. Somewhat similar response was received from investors during the Great Elysee Cellar Sell-off in France last month. This sell-off disposed around 10 percent of the presidential collection and gathered €718,000 for 1,200 bottles of wine.
These incidents and trust on Fine wine are a new hope for wine investors. It is now certain that all the leading finance groups are considering wine as a stable and risk-free investment. The Wall Street is finally ready to accept another significant investment alternative. Some of the most famous wines are French and Italian in origin. French wines have dominated the wine market for an exceptionally long period. The past few years have seen an increase in the popularity of Italian wine. For investors looking for an alternate investment option, wine is the best choice to get along with.
Understanding Wine Investment Market
With the Fine wine investment market gaining average investors, it is possible for you to invest and get profitable returns from the wine market. However, an investor should keep in mind that less than 1% of the wine produced worldwide is of investment grade. Some of the most famous variants include top ranks of Bordeaux, the Vintage Wines, Rhône wines, Champagne, and the top ranks of Burgundy. One of the most prominent reasons to invest in wine is to understand that it has no correlation to the stock market or current interest rates.
Most of the wine investors start investing because of the captivating nature and status associated with wine. Very few of them ever consider drinking the wines listed in their portfolio. Fine wines are stored in a controlled atmosphere with optimal temperature and humidity-level. These storage facilities ensure the quality and pristine nature of wine. One would be surprised that some investors are even not aware of the differences in brands including Bordeaux or Burgundy. They consider wine as an asset class rather than a drink to be enjoyed.
There are some wine investment funds which allow investors to invest in some of the finest quality wines available worldwide. Some of these funds include the Fine Wine Investment Fund, the Vintage Wine Fund, Wine Growth Funds, and the Elevation Wine Fund. One can start investing in these wine funds with a minimum investment of $20,000 which up to $50,000 and even up to $250,000 (the Elevation Wine Fund) in some cases.
Most of the wine funds invest in Bordeaux wines dominantly because Bordeaux wines have offered substantial returns in the past several decades. It is possible to receive two-digit returns on these funds. These funds offer payments in cash and in wine, as per the choice of the investor. The wine is stored in professional cellars to maintain their provenance and quality.
Investors can keep a track of their wine investments with the help of Liv- Ex 100 index. It is a wine index established in 1999, and it tracks the top 100 most desirable wines in the world. The current list of Liv- Ex is dominated by Bordeaux, though it has some Italian wine and Champagne in its list as well. According to the experts, investors considering Liv- Ex as their standard have gained more returns of 15% and above. The bottom line for wine investors is to understand that there is a limited supply of the top-quality wine, and it is the main driving factor of the wine market. There is a risk in wine investment, but the rewards are much bigger. If you are looking for a rich return, include wine investments in your portfolio.
Author Bio: Jason Phillips wrote this article. He is the co founder of the site wineinvestment.com where you will get best coverage for the investment market. Also they have 15 years of experience in fine wine and are one of the UK’s largest fine wine investment companies.
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Category: Investing
