Can a bear equity market ignite interest in fine wines as an alternative investment?
Collecting wine is no longer a privilege of just the super wealthy now that special investment funds have sprouted amid a search for alternative assets to traditional stocks and bonds.According to a joint report by Vinexpo and IWSR Magazine, the US was the worlds top market for wines worth US$35 billion in 2016 and is expected to grow by 25 per cent to reach US$45 billion by 2021. Meanwhile, Chinas market is expected to grow 30 per cent from US$15.24 billion to US$23 billion over the same period.
In the past 12 years, fine wines have outperformed global equities and gold, said the Swiss bank. At the same time, wines were also less volatile compared to the yellow metal, a traditional safe haven.
However, investors also need to be aware of the risks while betting on the assets whose supply depends on the whims of weather and demand can fluctuate.
Also, it is a small market with low liquidity and high dealing cost. Currency risk could be another issue as the best wines are mainly traded in British pounds.
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