An investment opportunity you can't miss
Volatility threatens to derail many mainstream market investment strategies.
However, the fine wine market offers a stable, tax-efficient environment with international appeal, even during times of economic turbulence.
FIRSTLY, WHAT IS FINE WINE?
For a wine to be exclusively labelled as “fine”, it needs to represent the highest level of winemaking by the most acclaimed producers from their respective regions.
Quality is key in every identifying maker of a fine wine. From it’s brand recognition, resale value, heritage, critical acclaim and a propensity to age exceedingly well.
It is by no means an easy feat to achieve. As of 2022, Fine Wine only accounted for 5% of wine produced annually.
INVESTING IN FINE WINES
Market Performance
Historically, the Fine Wine market has outperformed many other investments and is considered a haven for funds. In the first quarter of this year, the COVID-19 crisis sent stock markets into free fall. While the S&P global luxury index fell 23 percent, the liv-ex fine wine 1000 slipped just four percent and had begun it’s recovery by May.
According to Forbes, the Liv-Ex Fine Wine 100 has risen by 270.7% over the two decades spanning July 2001 to July 2021, outperforming the S&P 500 by 8 percentage points over the same period.
More Than an Investment
Luxury goods and markets are often led by fashion. Fine wine seems to have a much broader appeal. In many countries it signifies success. By broadcasting success in this way, fine wine is given an extra dimension as an investment.
Physical Owernship
The tangible aspect of a fine wine may be a reason why investors like this market; it is comparable to property without the maintenance or dependence on trends. A safe and sensible investment for those experienced in trading fine wine and those who aren't.
Few tangible assets can be easily traded internationally and even fewer are not reliant on a single market.
Loose Correlation to the Market
The top end of wine trading is self-contained because it shadows the movement of wealth around the globe rather than being permanently attached to a single economy
This unique characteristic means it is less susceptible to the fluctuations witnessed in conventional markets and, more importantly, provides flexibility, as its appeal is less open to fashionable interpretation than other luxury collectables.
Tax Efficient
As wine is an asset, not a financial product. It is not subject to capital gains tax or Common Reporting Standard (CRS) (subject to miscellaneous income, inheritance tax, etc).
The wine market is proving to be one of the top-performing assets, offering stability and steady year-on-year returns with an incremental growth over months and years.
A FINE WINE SOCIETY
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