Investment: Fine Wine, Good Returns



Wine

Wine

Many investors have started buying up wine in recent months, amid the volatility of equity markets and the unreliability of sovereign bonds.

Over the last eight and a half years, since The Wine Investment Fund (TWIF) started, it has proven to be less erratic than almost all other asset classes. It has also seen better returns than gold, oil, the FTSE 100, and Hong Kong’s Hang Seng Index.

Fine choice

Andrew della Casa, director of TWIF, said that he chose wine as the main investment for his fund after taking a “really wide and very esoteric” look at other assets. He surveyed gold, forestry, and commodities before settling on his investment of choice.

He said that he and his colleagues preferred wine because “there’s an awful lot of data out there on this asset class.” Della Casa says that with the amount of data taken down about wine, he could go back decades rather than years when crunching the numbers.

The main point of reference is LIVEX, which is a fine wine exchange that monitors the 100 most highly traded wines. And there is actually data going back to France’s 1855 classification.

Della Casa believes that despite the prevalence and longevity of the data, the Wine Investment Fund is the first to analyse it for investment-class purposes.

Wine world

He also argues that the difference between his firm and other wine investment firms that have sprung up after the success of TWIF is that the others come from the wine world. As della Casa days, they are wine brokers, not asset managers.

This makes him classify other firms as traders rather than longterm investors.

Della Casa buys only the top 1% of Bordeaux, with no other region making the cut. His firm avoids fashion and trends in the wine world, and invests in cases from the top 35 Chateaux. He also buys wines from four to five years previous, as that is when the vintage can be properly judged.

Most of the wine assets in his fund, valued at £45 million, are vintage wines from 10 to 20 years old.

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