Fine Wine provides investors with balance of risk and reward in volatile times, says Cult Wines

In response to global equities falling significantly in value in the past week, following the widespread outbreak of coronavirus, Cult Wines has published a new statistical analysis showing that wine, as an asset class, provides diversification, reduces risk and enhances long term returns as part of a multi asset portfolio. 

 Tom Gearing, Managing Director at Cult Wines, says: “It is clear that the coronavirus is having an unprecedented impact on global equities, the likes of which we have not seen since the financial crisis over a decade ago. With equities falling by a fifth in value in the past week, it more important than ever that investors adopt a pragmatic approach to their investments, having in place a diversified portfolio to cushion against violent market developments. 

“Our data clearly shows that throughout the financial crisis, between November 2007 – November 2009, the Liv-ex 1000* consistently outperformed the MSCI World Index.   

Moreover, in the long-term, the inclusion of fine wine reduces risk and provides diversification benefits to a portfolio and among other alternatives, such as commodities and real estate, delivered a similar level of return but with much lower volatility.
“While we cannot foresee how far-reaching the current sell off will be, we believe the demonstrated past resilience of fine wine and its ability to deliver uncorrelated returns over the long term, make it a very strong candidate for opportunistic buying, should prices suffer from rippling effects.”