Fine Wine vs Global Equities

The recent turbulence in the stock market has fuelled debate amongst global investors concerning the importance of portfolio diversification and capital allocation in to alternative markets. This report defines the genetics of Fine Wine as an asset class and its relationship with global equities.

Our findings confirm that Fine Wine is the leading alternative asset class, governed by a unique set of market fundamentals and risk factors. Exposure to this market provides stability in market down-turns and low levels of correlation during periods of ‘normal’ market performance.

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In a world where the performance of financial assets has been historically volatile, we have demonstrated that investing in fine wine, offers low volatility in addition to capital growth.

History shows that fine wine has displayed consistently lower volatility in return over both the short and long term, compared to equities of emerging and global markets. Fine Wine returns have consistently displayed a weak response to swings in global equity markets, indicating a lack of correlation to the traditional financial markets.

During a deteriorating economy, fine wine has proven to be a defensive asset class, providing protection to investors who hold equity-dominated portfolios. Rising wealth, weakened GBP and a continued interest in fine wine within China and other non-traditional wine markets, will continue to strengthen growing demand for wines with strictly limited supply. The subsequent impact on pricing will continue to support positive trends in the market over the short long term.

The outlook for the fine wine investment market is positive, with broadening interest into regions outside of Bordeaux (e.g. Burgundy, Italy & USA) and fundamental limited supply contributing to continued growth.

The outlook for the fine wine investment market is positive, with broadening interest into regions outside of Bordeaux (e.g. Burgundy, Italy & USA) and fundamental limited supply contributing to continued growth.

Fine Wine vs Global Equities

About the author
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Yijun(Lena) Lu
Research Analyst
Direct Phone: +44 (0) 207 1000 967

Lena joined Cult Wines in early 2018 having previously completed several internships in the finance industry, including in a venture capital fund and the Investment Banking arm of China Securities, as well as passing her CFA level II qualifications. The experience in the investment industry combined with her passion for fine wine enables her to view this market with a fresh and unique perspective. In turn, this positions her unequivocally capable of identifying opportunities and risks in this complex market, using quantitative and scientific economic methods.

She graduated from the University of Toronto with bachelor degree specializing in finance and economics, and she has successfully passed the CFA level II exam. She is also pursuing the WSET level 3 designation. Outside of work, she loves exploring new gastronomical experience. On the wine front, Yijun has a passion for the wines of Germany, Bordeaux and especially Champagne.