WineCap featured on YourMoney.com today in an article that focused on how fine wine is gaining an increasing amount of investor attention in a climate of rising inflation and market volatility. You can read a summary below:
In the current climate of war, instability and rising inflation, alternative asset classes such as fine wine, are in the spotlight for investors.
A lot of asset classes have been materially hit by factors including the war in Ukraine and issues arising from Covid-19 including record inflation.
High inflation creates a big problem for some investors. Price increases reached 9.2% in the UK in March, hitting a 30-year high and that rate is predicted to continue to grow over the rest of the year.
Economies in Europe and North America are also experiencing these kind of pressures. Central banks have begun increasing base rates and further rises aren’t ruled out later in 2022.
With uncertainty in the markets, lots of investors are looking to diversify their portfolios and reduce risk.
Alternative asset classes are attracting a lot of attention and investment-grade wines are exhibiting capital strength. The fine wine market is fostering a stable environment, even during periods of economic uncertainty.
The high end of the fine wine market is self-contained and not linked to financial markets. This is due to the fact that it shadows the movement of wealth around the globe. It has low volatility when compared to conventional markets and other ‘luxury’ asset classes.
The past 25-30 years has seen investment-grade wines grow in popularity due to their finite production levels, flexibility and stability.
It also has a proven track record of resisting inflation. The main fine wine 1000 index – from its launch to the end of 2021 – has gone up 270.7%, survived three global financial crises and delivered more returns than the S&P500.
Interestingly, in the current economic climate, as inflation spiked towards the end of 2021, the price of fine wine did too and the 1000 index rose over 19% last year.
Fine wine is generally viewed as way to store value. In the past few years, wine has performed better than gold. In 2021, wine returned 22.5% while gold returned -2.69%.
The market has grown in recent years with more investment from both sophisticated and retail investors; this has generated more demand for limited physical cases of wine. This demand is continuing to grow. For the world’s most sought-after wines demand always outstrips supply.
Companies are democratising wine investment, something that historically was only for high net worth individuals and sophisticated investors.
Retail investors can now take advantage of lower fee models and harness cutting edge technology to benefit from fine wine’s diversifying powers in a currently uncertain and unstable environment.
WineCap is a new wine investment company which analyses over 400,000 wine prices a day to identify the right, undervalued wines to buy and sell across the globe.