Should you crash the wine party?

The soon-to-be launched Wine Asset Managers may seem like a good idea for those who want to cash in on the wine bonanza of recent years but lack the expert knowledge. But investors should be wary.

Jody Clarke
By
published
in Features

Next month will see the launch of Wine Asset Managers, the latest wine investment fund aiming to cash in on the wine bonanza that has seen fine wine prices rise eight-fold since 1978 a compound return of 8.7% a year, according to the Decanter Fine Wine Tracker index. If you don't know your new world from your old world and aren't able to deal with the delicate issue of storage yourself, then getting an expert to do it for you could be a tempting prospect.

But beware, says Philip Coggan in the FT: the fees structure is very similar to that of hedge funds. Investors pay an initial 5% fee, 1.25% subscription fee, plus 20% of the overall gain that is over a hurdle rate of 50%. Currently, profit from investing in wine is free from capital gains tax because it is classed as a wasting asset', but the Government may begin to crack down if it thinks such assets are being used as a tax dodge.

And as Coggan points out, investors should also be aware that while the wine investment fund's 2003 tranche is up 43.6% since launch, and Davisons Vintage Wine Fund up 32% since launch in 2003, "given the limited size of the market and the youth of some of the funds, this really is an area where past returns are no guide to the future".

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Jody Clarke
Jody Clarke

Jody studied at the University of Limerick and was a senior writer for MoneyWeek. Jody is experienced in interviewing, for example digging into the lives of an ex-M15 agent and quirky business owners who have made millions. Jody’s other areas of expertise include advice on funds, stocks and house prices.

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