WSJ: fund with wine
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We wine lovers generally think about how to turn our money into wine. But apparently there are those who think that wine can turn into money.
The Wall Street Journal had a big story on page B1 over the weekend about the new phenomenon of wine investing (no free link to the story, “Fine Wines No Longer Just Tempt Collectors”). In London, the Fine Wine Fund has been set up with the goal of investing in wine. They charge fees similar to a regular fund for alternate investments with a two percent annual management fee and 15 percent of the profits.
Is making money out of wine a panacea? Post your thoughts in the comments! One thing is for sure: while the story doesn’t mention the size of the Fine Wine Fund, if a lot of money sloshes into the relatively small market for investment-grade wine, prices will likely go to even more eye-popping levels. Let’s just hope that some corks get popped along the way too.
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Steve Bachmann was quoted in the story talking about inefficiencies in the wine market. You can check out his thoughts on how to value wines on his blog, The Wine Collector. He’s also the CEO of Vinfolio, a fine wine retailer.
tags: wine | wine collecting
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One of the three best wine blogs
On February 26th, 2007 at 6:23 pm ,Mark wrote:
I see that Decanter.com has just launched its guide to wine investment (http://www.decanter.com/specials/104729.html) - sadly I don’t have the £10,000 suggested as the minimum required for a balanced portfolio (nor the will power required to tuck into my nestegg…)
I think you’re right, however; an increased interest in wine investment could push up prices in the short-term at least. With any market, however, there needs to be room for growth and when this becomes limited we’d likely see a correction - or maybe even a crash - as investors get out. Perhaps then the rest of us will be able to pick up some great wines at affordable prices…hopefully just as they reach their peak! That’s my plan, anyway.
On February 26th, 2007 at 10:15 pm ,Dr. Vino wrote:
Perhaps a crash will come, Mark. Indeed, bubble-like conditions where wines are priced like Dutch tulips in 1637 you’ve got to wonder. Of course there are those who will point to the positive supply-demand characteristics: Chateau ABC only produces X cases of wine every year, but every year there are more people who gain the purchasing power to buy it.
On March 1st, 2007 at 1:23 pm ,Winevestor wrote:
There are no ifs and buts - Wine is an investment. If you look at it as part of a portfolio, it is largely uncorrelated with the broader US financial markets (a good diverification ploy), and has had a ROR equivalent about equivalent to the S&P500 over the long term (and a lot better over the short term).
However, for those of us who love wine and know where the good stuff is, it gives an extra dimension to our hobby, to get more than we need and then sell some off when we need another fix of the new stuff.
Life is good!
On March 23rd, 2007 at 11:40 am ,Philippe wrote:
An important point in favor of wine investing is that it is difficult for the taxman to know the basis, and, for now at least, the returns skirt the capital gains trap.