Tue, 03/12/2019 - 13:27
Wealth managers and financial advisers are becoming increasingly bullish about the appetite for investing in the fine wine market, which is now worth over USD6 billion a year, according to new research from Cult Wines, a specialist in fine wine management services.
The research explored attitudes towards wealth diversification at a time when alternatives allocation has become more common in the wealth management industry. According to the findings, an overwhelming majority (91 per cent) of advisers expect demand to increase or remain stable over the next 12 months, with 41 per cent predicting growth.
The findings also showed that nearly two-thirds (61 per cent) of financial advisers believe that the European Central Bank’s decision to renew quantitative easing (QE) will further push up the value of physical assets such as fine wine, art and classic cars. A third (34 per cent) of advisers expect prices to remain the same and just 5 per cent think they will fall.
Key to the growth of fine wine as an alternative asset is increased familiarity among investors and this trend is set to continue; over half (57 per cent) believing that awareness among advisers of the role of fine wine in investment portfolios will rise over the next five years.
Despite the risk of increased volatility in sterling, the international currency for fine wine, almost half (44 per cent) believe that it will remain a compelling long-term diversification tool.
Research published earlier this year by Cult Wines showed that fine wine is less volatile than other major alternative investments. Between 2015 and 2018 a portfolio which included fine wine as an alternative asset would have delivered a higher risk adjusted return of 8.63 per cent when compared to one that did not include fine wine.
Tom Gearing, Managing Director of Cult Wines, says: “Alternatives allocation is becoming more appealing in the wealth management industry. Today’s research clearly shows that advisers are confident that more investors could turn to investing in fine wine over the coming months, which can not only prove to be a prudent investment but also much less volatile than other major alternative investments in addition to equities.”
“With uncertainty around Brexit, currency fluctuations and trade war concerns, fine wine could provide resilience in these tough market conditions, combined with the opportunity for capital appreciation.”
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