A fine wine portfolio can bring different things to different people. For some, it is a chance to indulge in a passion by collecting some of the world’s finest and rarest wines. Others will recognise how fine wine can form an important part of an investment portfolio, which has led to its increased acceptance in discussions about alternative assets.
The main reasons why investors might turn to fine wine and other alternative assets include enhancing the return potential of their portfolios, increasing diversification, or hedging against market risks.
Fine wine’s investment benefits were on full display in 2022, while traditional 60-40 portfolios suffered amid inflation, deteriorating economic growth and geopolitical tensions.
“Given the uncertainty around the economy and a lot of talk about recession, people are looking for alternative places to invest their money – and many are turning to wine.” [1]
Shana Clarke, Fortune, Freelance Journalist
Fine wine vs other assets
Total returns of Cult Wines Global Index and select financial indices
Fine wine’s ability to deliver strong, consistent returns through the turbulent 2022 forms an example of its potential as an investment. Here at Cult Wines, we believe fine wine remains an attractive long-term component of a portfolio.
| 2022 Return | 12-month | 3-year | 5-year | 5-year Volatility* | |
|---|---|---|---|---|---|
| Cult Wines Global Index | 17.40% | 13.38% | 40.23% | 50.75% | 1.09% |
| S&P 500 (TR) | -18.11% | -7.71% | 41.02% | 59.71% | 5.39% |
| FTSE 100 (TR) | 4.70% | 9.63% | 32.46% | 31.71% | 4.03% |
| Nasdaq Composite (TR) | -32.54% | -15.96% | 36.91% | 64.77% | 6.31% |
| iShares MSCI All Country Asia ex Japan ETF | -21.66% | -16.73% | -4.20% | -14.69% | 5.71% |
| Gold (in USD) | 1.55% | -5.76% | 16.20% | 37.89% | 3.98% |
| Bitcoin | -39.93% | -46.44% | 170.73% | 123.83% | 22.47% |
| Bloomberg Commodity Index | -64.22% | -7.33% | 49.56% | 20.44% | 4.62% |
*Fine wine = Cult Wines Global Index; **US Treasury Bonds = iShares 7-10y US Treasury Bond Index.
Volatility = Rolling 5-year standard deviation of monthly returns.
Source: Wine-Searcher, Investing.com as of 28 February 2023.
Past performance does not guarantee future results.
Take a look at some of our articles below, where we explore fine wine’s credentials as alternative asset, its role in an investment portfolio and plenty more.
Why alternatives?
The global alternative investment market is growing rapidly. Although estimates vary, most studies point to an expanding market. Here, we outline why people might turn to alternative assets and highlight some of the potential benefits and risks, including those of collectibles like fine wine.
$18.3 Trillion
The global market for alternative investment in 5 years time.
Source: Preqin 2022
162%
Fine wine has increased in value on average 162% in the last 10 years proving its stability in a volatile market.
Source: Knight Frank Wealth Report 2023
39%
Of UHNWIs are likely to invest in wine this year. Interest in alternatives is on the rise and will be where wealth is grown over the coming decade.
Source: Knight Frank Wealth Report 2023
x2
Global alternative asset market set to double in size by 2027.
Source: Preqin 2022
50.75%
Cult Wines Global Index reports a 5-year increase of 50.75% for wine performance.
Source: Cult Wines Global Index as of 28 February 2023
73%
Millennials & Gen Z-ers, do not believe it’s possible to achieve above-average returns by relying solely on traditional stocks and bonds.
Source: Bank of America Private Bank Study 2022
37%
18-35 demographic admit that limited-edition sneaker purchases were motivated by the investment opportunity.
Source: Harris Poll