The Wine Investment Fund (TWIF) is indicating some strong results and fast becoming what some regard as the new “liquid gold.”
Year-on-year financial indices based on wine prices were up 40.8 percent and 52.4 percent, with positive gains during a period where the stock markets remain rather flat.
Since 2005, Liv-Ex, the London-based market for wine, established a price index of 100 actively traded wines and one for leading clarets, as well as a broader 500-constituent index.
Otherwise known as the “claret chip” index of top-rated Bordeaux wines is a good benchmark performance indicator of investment grade wine. It shows a more volatile trend than the other two. Historically the value of the index grew three-fold between the start of 2005 and September 2008 but plummeted substantially when the financial crisis began in October 2008. The index has not only regained its value, but also exceeded its peak value at September 2008.
This is an extremely impressive result both in absolute terms and compared to the Liv-Ex 100 index. TWIF maintains more balanced portfolios than is reflected in the composition of the Liv-Ex indices, which have tended to be Lafite-heavy.
“As the broader market outperforms Lafite, so TWIF’s portfolios tend to benefit to a greater extent,” said Andrew della Casa, director of The Wine Investment Fund.
Della Casa says that with inflationary pressures rising and investors increasingly turning to physical assets, 2011 should be a good year for fine wines.
However, according to the Money Observer, Martin Bamford, managing director of independent financial adviser firm Informed Choice, says, “[Despite] returns like those we saw from wine last year are unlikely to be repeated again this year, it is an alternative investment market that tends to have a steady annual return.”
The deregulation of wine import tax in Hong Kong in 2008 has made its mark and shifting global investment of wine. Since January, their main auctions in Hong Kong has already raised a combined sales revenue of $25 million.
