Fine wine has long been a way for the savvy investor to combine business with pleasure, but the numbers prove that it is increasingly the discerning choice for an investor as focused on returns as enjoyment.
At a time when investment choices are ever-widening, some of the most startling returns are coming from asset classes once considered non-traditional. With bonds low and stocks subject to uncertainty, interest is flowing more and more to distinctive goods proven to hold their value over time.
A surprise may be just how much wine investment outpaces the alternatives. Analysts have now reported on the recent returns available from a range of investments, measured against the FTSE 100.
The first surprise is the modest performance of art as an investment class. While hammer prices for the most elusive and sought-after lots continue to capture headlines on occasions, the performance of the sector overall offers less comfort to the investor. In fact, art as an investment failed even to keep pace with the average returns of the top shares and stocks, registering just below the FTSE 100’s 3-4% growth year-on-year.
In the same 20 year period studied, it will not catch the knowledgeable investor unawares to learn that precious metals have performed a good deal better than the FTSE 100. Analysts studied both silver and gold over the same time period, noting the strong gains for both, particularly given global volatility over the years in question and the flight to safety in these traditional resorts.
Yet of all the classes examined, it was wine investment which secured the top return across the two decades. The finding is notable for a variety of reasons.
First, the rate of return, year-on-year, is 14.2%. Indeed, fortunate investors who bought into Bordeaux seconds and other fine vintages around the year 2003 would by now have seen values increase by 600%. Figures for many other wine classes have also been impressive, so much so that wine investment is now a standard feature of financial advice given to super-high-net-worth individuals.
The other stand-out finding from the research is that wine investment offered the lowest annualised standard deviation, coming in at only 8.2%. This represents less volatility than the other asset classes considered, pointing to wine’s longstanding performance as a long term investment. While gold delivered the second-best return behind wine investment, it was subject to a higher level of volatility.
The findings will be of interest to individuals and institutions alike seeking investment strategies in the current climate. As the 2017 en primeur season approaches, the news is a reassurance and an encouragement that wine investment continues to produce excellent performance across both the measures of return and of stability.
The comparative stability of wine is an extra attraction at a time of uncertainty surrounding other investment choices. With Brexit leaving the future standing of exchange rates and tariffs still unclear, the steady performance of wine investment over time is a reassuring alternative for the investor with the longer view.