Wine Investment: How to Invest in Wine Bonds?

Wine Investment: How do I Invest in Wine Bonds?

Few weeks back, I have post the article,

How to Invest in Wine?

Wine is the exotic asset class. And Investors invest in wine for Capital appreciation. Owning a stock of wine is exactly same like owning a piece of real estate, stocks, bonds, gold, mutual funds or any other asset class. Old Wines appreciate much more faster than equity sometimes.

Previously Wine Investment was a game of rich people only. But now many companies have entered and set Wine Investment funds just like mutual funds.

“Wine investment is no longer the preserve of the rich and flash city types; you don't even need a cellar to take advantage of the large returns wine can offer.

In the last ten years the wine investment market has become both more accessible and complex, with many funds and investment vehicles being set up. While investors can still buy cases of wine to store and drink themselves, wine investment companies will manage a wine portfolio in the same way a stocks and shares portfolio would be managed, trading on the clients' behalf sometimes without any investor input.

While some wine investment companies will have their own storage facilities and move any wine they acquire on a clients behalf into the company's cellar, most will buy and sell without ever moving the wine. This allows the investment body to be very selective about which chateaux and years they chose to invest in, often selecting either only 'first growth' – the most expensive and exclusive classification of wines.

The Liv-ex 100 index- the index which tracks the world’s most sought after wines- is up 10pc in the last year. Prices were hit by the economic crisis, a case of Lafite 2005 was worth in the region of £12,000 two years ago, but the market as a whole fell about 20pc, and Lafite prices were especially hit with bottles dropping by more than 50pc to just £5,500 in December last year. You can now pick up a case for around £7,500.”

In short, Wine Funds work like Gold Mutual Funds, Real Estate Mutual Funds or Equity Mutual Funds. The Fund manager of the wine fund manages the portfolio of wines on behalf of you and you can enjoy the superior returns.