Investors Increasingly Turning to Wine Funds for Returns
Wine has a long history of robust return, but investors have historically had trouble finding on-ramps.
That’s now changing with a constellation of wine funds and accessible portfolios. These investment options offer diversified portfolios, entry points from US$100 to US$10,000, and eliminate many complexities and logistical challenges.
The number of wine investment funds and platforms is still small—just over half a dozen in all—but the field has more than doubled in the past few years and the availability of these options comes at an extraordinarily good time. As stocks and bonds and most asset classes were down sharply through mid-October 2022, wine investors were enjoying healthy returns: The Liv-ex 1000 index, a wine benchmark that includes the most widely traded wines, was up 14% through mid-October 2022, while the S&P 500 was down 24% and the S&P U.S. Aggregate Bond Index was down around 14%.
“We could be one of the only places in people’s portfolios creating returns right now,” says Nicholas King, CEO of Vint, a Richmond, Virginia-based wine platform that launched in 2019. Vint sells fractional shares of wine collections that it curates and stores in its own cellars. “When you compare wine to other asset classes based on returns, correlation, and volatility, it’s a no-brainer to put in your portfolio.”
In fact, a 2015 academic study from Vanderbilt University, HEC Paris, London Business School, and Cambridge Judge Business School found wine has returned an average annual 8.5% for the past 120 years.
Image: The 4,200-bottle personal cellar of HRH Prince Robert of Luxembourg sold at auction in May 2022 for US$6.2 million
The structure of wine investment options varies. Vint is a platform with a US$100 minimum, while Cult Wine Investment, launched in 2007, is a platform enabling investors to buy individual bottles rather than shares—it handles the storage, insurance, and details—with a US$10,000 minimum. Meanwhile, Vinovest is a Los Angeles-area firm that came on the scene in 2019 with both a fund of wines for accredited investors and a platform for individuals to buy wines at a much lower entry point of US$1,000.
“You can say, ‘I have US$5,000 to invest but have no idea what to do.’ We build them a portfolio of individual bottles. You can get exposure to different bottles and regions, and choose an investment period usually of three to five years, five to 10 years or 10 to 15,” says Anthony Zhang, Vinovest co-founder and CEO.
Through mid-October 2022, the average Vinovest wine investment returned 14%, Zhang says. Top performers in the fund’s portfolio were Krug Vintage Brut 2008 with a 21% gain and Domaine Dujac Bonnes-Mares Grand Cru (2015), which surged 38.4%.
Yet another structure is run by the London-based Wine Investment Fund. Founded in 2003, the fund focuses on Bordeaux wines and notes on its website, “investments may be redeemed at any time.”
Each fund and platform comes with its own minimum investments, holding periods, and fees, so a careful look under the hood is a must. Fees can be high: Wine Investment Fund charges a 1.5% annual fee plus 20% of profits. Vinovest’s annual fee ranges from 2% to 2.85%, but doesn’t dip into profits. Zhang notes that fees include storage and insurance, “as well as ongoing advice and help selling within their target window.”
The average return on a Vinovest wine investment through mid-October 2022
More from the report
Discover how these trends may impact your city
The Sotheby's International Realty 2023 Luxury Outlook Report is an ambitious exploration into high-end residential markets across the globe and identifies trends that are likely to shape the coming months in luxury real estate.
© 2023 Sotheby’s International Realty. All Rights Reserved. The Sotheby’s International Realty trademark is licensed and used with permission. Each Sotheby’s International Realty office is independently owned and operated, except those operated by Sotheby’s International Realty, Inc. The Sotheby’s International Realty network fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. This material is based upon information which we consider reliable but because it has been supplied by third parties, we cannot represent that it is accurate or complete and it should not be relied upon as such. All offerings are subject to errors, omissions, changes including price or withdrawal without notice. If your property is listed with a real estate broker, please disregard. It is not our intention to solicit the offerings of other real estate brokers. We are happy to work with them and cooperate fully.
Do Not Sell My Personal Information | Privacy Policy | Terms of Use | Accessibility Statement