6 Reasons to invest in Fine Wine
Wine Outperforming Financial Markets
The Liv-Ex Fine Wine 100 Index has appreciated by 161.3% over the last 11 years, outperforming gold, crude oil, the Hang Seng and the FTSE 100, to name but a few.
Perfect Inverse Supply Curve
Wine is a unique asset class in that there is a finite and diminishing supply which is set against ever increasing demand, particularly as certain sought after vintages are consumed and therefore become even rarer. Wine is also unique in that it improves as it ages, meaning that it is most desirable when it is most scarce – the ideal asset!
Top-performing Asset Class
Fine Wine was recently ranked second out of ten key appreciating asset class in the 2016 Knight Frank Wealth Report, over a one, five and ten year period, second only behind classic cars. Chosen diligently, a portfolio of wine can be relatively liquid compared to some asset classes.
Increasing Worldwide Demand
A general worldwide demand for Fine Wine has been augmented by booming demand from emerging wine markets, like China, India, the rest of Asia, and South America. Winemakers cannot produce more wine, so demand will continue to drive up the price of Fine Wine.
The benefits of a physical asset
As a physical asset, Fine Wine offers a hedge against inflation, insurance against a market downturn, low correlation to other asset classes, low volatility over the long term, and asset & portfolio diversification.
Tax efficient form of investing
Because of its status as a wasting asset, Fine Wine has a special tax status and thus is exempt from several types of capital taxation, including Capital Gains Tax. Investors should seek their own tax advice.