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Fine wine vs gold (source Cult Wines)


From Cult Wines…. Wine vs Gold.

Our Investment & Research team will be running a series of Fine Wine Comparisons vs other asset classes over the next six months – with the first: Fine Wine vs Gold below. They have looked at all aspects of the asset class and how they complement a diversified portfolio. Hugely interesting results that only go to reinforce our view that Fine Wine has established itself as a very attractive option as a “safe haven” asset class.

Wine vs Gold

Wine and Gold are both seen as safe-haven asset classes, to be used as diversifiers and a hedge against traditional markets such as equities.

Safe-haven assets and equities are not mutually exclusive and should always be seen to complement each other in an investment strategy.

The key metrics for consideration here are:

  1. Performance

  2. Volatility – where a low figure is considered less risky

  3. Sharpe Ratio – calculated from the performance and volatility

  4. This is a measure of risk-adjusted return, extremely useful for comparing two similar assets

  5. Essentially, ‘what is the return per unit of risk taken?

  6. A ratio below 1 is considered sub-optimal

  7. A ratio above 1 is considered acceptable

  8. A ratio above 2 is considered very good

  9. Correlation to equities

To compare these metrics, we have taken Cult Wines ‘max timeframe’ of 11 years…

And have provided data for every period ascending by two years, starting at one year. For each metric, we have color-coded to show which asset ‘wins’ that category:

Key findings:

  • Over every timeframe measured here, Wine outperforms Gold in pure price appreciation, although the difference is not high

  • Over every timeframe measured here, Wine has lower volatility than Gold by a high margin

  • Over every timeframe measured here, Wine has a higher Sharpe Ratio than Gold by a high margin

  • indicating a more attractive return for the risk taken

  • Over every timeframe measured here, Gold has less correlation to S&P 500 than Wine, although the difference is not high

  • in all results here, the correlation for both asset classes against S&P 500 is rated ‘weak and likely unimportant’

Other factors – as well as investing for capital growth, investing in wine:

  • builds you a diversified cellar from which you can decide to have cases delivered for drinking at any time

  • gets you to access to wines tastings, dinners, vineyard visits, and other exclusive events

  • provides you with the ultimate downside… worst-case scenario, you have a unique collection of the finest and rarest wines in the world

Importantly, these performance figures are for the benchmark Liv-ex 1000 index. Cult Wines’ portfolio demonstrably outperforms this: 8.9% per annum over the last 5 years; 7.9% per annum over the last 11 years, in line with our target 7-9% annualized.

Marcus Allen

Director of Business Development


Tel: +44 (0) 207 1000 950

Direct: +44 (0) 207 1000 933

Mobile: +44 (0) 782 5586 829

WeChat: marcusjamesallen

The Clockwork Building, 45 Beavor Lane, London W6 9AR

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