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The Strong Case for Wine as an Alternative Investment

1 19 26
03.08.2021

Fine wine is gaining steam among investors as an alternative asset. It offers a low correlation with the traditional markets, steady returns and bond-like volatility. Savvy investors are increasingly turning to investment-grade wine as a way to diversify their portfolios.

Here are five reasons why.

Fine wine has a long history of strong returns on investment. The non-traditional investment has yielded a 13.6% annualized return over the last 15 years. That means people would double their money roughly every six or seven years. Just look at the Liv-ex fine wine indices since 2003. Nearly all of them have tripled in value.

Even amidst a decade-long bull run, stock markets have not been able to keep pace in that time. The Dow Jones has registered a 7.8% annualized return over the last 15 years or 10.47% for people that reinvested their dividends. The S&P 500 didn’t fare much better at 8.58% and 10.66%, respectively.

Fine wine doesn’t just outpace global equities. It also stacks up well against other real-asset investments. Just take a look at the Knight Frank Luxury Investment Index (KFLII), an index that measures various investment-grade assets. In 2020, five of its nine asset classes had a negative return on investment. Not fine wine, though. It returned 13% for the year, the second-best performance only behind Hermès handbags.

Related: Why Is a Luxury Home a Better Investment?

Don’t put all your eggs in one basket. It’s the first thing........

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