Faltering Euro Presents New Opportunities for Fine Wine Investment

Wine funds are enjoying a stronger buying power when acquiring assets in Europe thanks to the weakened Euro, adding to fine wine’s reputation as a viable alternative asset class.

More and more investors have been asking for information about fine wine as an investment vehicle, reflecting an increase in global demand for wine-related investment products. A variety of factors, including its lack of a direct connection with traditional asset classes like stocks, bonds and commodities, as well as its proven resistance to widespread market instability, have worked to played a role in fine wine’s increasing popularity among savvy investors worldwide.

In addition, China’s projected role as a leading growth market, expected to grow by around 30 percent over the next three years, has added to the attractiveness of fine wine as a viable alternative asset class. As a result, some asset management firms have announced plans to increase the number of wine-related investment vehicles that will be offered in the next year, citing the sector’s strong gains during the current economic downturn as another reason for the increased interest among investors. For example, the Liv-ex Fine Wine 100, which is currently the industry’s leading benchmark index, has realized gains of around 40 percent over the course of the last year, while the S&P 500 grew only 11 percent during the same period.

The current weakened state of the Euro presents savvy investors with the opportunity to acquire valuable assets at a relative bargain, as it will cost investors less to buy more quantity today than it did even just six months ago. As a result, some asset management firms are predicting annual returns on fine wine investments that range from between 10 and 15 percent over the next eight years.



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