Investors Raise a Glass as Wine Fund Pours Returns

Posted by Tom Magor in Personal Finance on 2 November 2016 - Tom is a Senior Credit Analyst at checkmyfile.

While numerous more “traditional” investment products have failed to provide the level of returns that they have in years gone by, a Malta listed fund, which primarily focuses on fine French wines and high quality Scottish whisky, has generated a fruitful cumulative net return exceeding 32% over the course of the last 4 years.

The Wine Source Fund states that the return was generated over the course of 4 years, leading up to August 2016, representing an annual net return of over 7% since its inception in September 2012. This compares favorably with the Liv-ex Fine Wine 100 Index, the industry’s main benchmark, which has exhibited a total rise of 7% over the corresponding 4 year period.

The fund reports its net present value on a monthly basis using pricing from Wine Owners, an independent wine valuation organisation that works closely with a panel of 200 professionals and Liv-ex.

The fund feel that their close ongoing communications with producers and international fine dining establishments allows them to make particularly insightful and considered decisions.

Philippe Kalmbach of The Wine Source Fund says, “These first-hand market insights led us to fine tune our strategy by investing in select markets and benefiting from favorable price dynamics in an overall quite challenging environment.”

The Wine Source Fund currently boasts a portfolio which comprises of in excess of 1,000 different wines and spirits from investors in France, Italy, Spain and the USA with Bordeaux and Burgundy wines representing more than 50% of investments.

While spirits account for only 10% of the portfolio, significant gains were made from early investments in the Macallan Lalique bottlings of aged whisky.

When considering the fund’s business model, Mr Kalmback says that approximately 40% of the total portfolio comprises of assets purchased directly from producers at preferential prices. The wines are then subsequently stored in warehouses before being sold to fine dining establishments across the world to generate considerable and stable returns.

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