investment returns for fine wine
ask DionBot: What is the investment returns for fine wine in recent years?
The investment returns for fine wine over different periods show a mix of stability and growth, although specific annual or quarterly returns can fluctuate due to various market conditions. Here’s a summary based on the information available:
- Long-term Growth: Fine wine investments have historically delivered an average Compound Annual Growth Rate (CAGR) of over 10%, indicating low-risk, stable growth over the long term. This stability is underscored by the asset’s performance during periods of significant global financial crises, where it has acted as a ‘safe haven’ for capital. The Liv-ex 100 index, a key market benchmark, grew 15.2% over the last 5 years, outperforming the FTSE100, which rose 11% in the same period. Champagne has been the leading region for investment wine performance, experiencing an average 48.4% growth over 5 years.
- Recent Performance: The fourth quarter of 2023 was challenging for fine wine investments, with the Cult Wine Investment Performance index down by 3.0%. This continued a bearish trend observed throughout 2023. The detailed performance varied across regions, with some areas like Italy showing better resilience. The downward trend was influenced by factors like post-COVID market adjustments and shifts in buyer focus towards certain regions or labels.
- Historical Returns: Looking at a longer horizon, since October 2009, Cult Wine Investment’s total return was 205.7%, which equates to a CAGR of 9.35%. This is compared to the Liv-ex 1000 benchmark index, which tracks a broader set of sought-after and traded fine wines, showing a return of 384% from the beginning of 2004 to September 2022, or a CAGR of 8.8%. These figures suggest that fine wine can offer strong returns and stability through different market environments, with a low correlation to equity and other mainstream assets.
These insights highlight the potential for fine wine as a stable investment vehicle with the capacity for significant long-term gains. However, it’s important to note that past performance is not indicative of future results, and investments in fine wine, like all investments, carry risks of partial or full loss of capital. Prospective investors should consider their investment goals and risk tolerance before investing in the wine market.
Finding specific annualized returns for wine investments over periods of 1, 3, 5, 10, and 20 years proves challenging due to the variability in data sources and the specificity of the investment (e.g., type of wine, region, vintage). However, I can provide some insights based on available information:
- 1-Year Return: It’s difficult to pinpoint an exact figure for the 1-year return on wine investments without specific indices or wines in mind. The fine wine market experienced some fluctuations in 2023, with key indices at Liv-ex showing a decline in the first 10 months.
- 3-Year Return: An investment firm mentioned aiming to beat the Liv-ex, which has returned around 11% a year, implying that they’ve seen consistent performance over the past three years.
- 5-Year Return: The Liv-ex 100 index, a key market benchmark, grew 15.2% over the past 5 years, while Champagne led the investment wine performance with an average growth of 48.4% over the same period.
- Long-Term Return: Historically, investment-grade wine has enjoyed low-risk, stable growth, delivering an average Compound Annual Growth Rate of over 10% in the long term. This performance suggests that wine investments have offered solid returns, comparable or even superior to mainstream assets over extended periods.
These figures should give you a rough idea of the returns you could expect from wine investments, though it’s important to note that performance can vary widely based on numerous factors, including the specific wines or portfolios invested in, market conditions, and timing of sales. For a more detailed analysis tailored to specific wines or investment strategies, consulting with a financial advisor or a specialized wine investment firm might be beneficial.