Surveying the funds

By September 17, 2010Fine Wine Market

Over the past 18 months, the fine wine market has experienced a dramatic turnaround. Back in February 2009 the market was struggling for direction after experiencing falls of up to 25% in the second half of 2008. Today, prices are continuing to hit new highs and the market remains buoyant following on from (or perhaps despite) a long and expensive 2009 campaign.  But how have the major wine funds fared over this period? To find out, we took a closer look at the performance of those funds that have been publishing an official NAV (Net Asset Value), or equivalent, for at least two years.

On reflection, it is clear that the first eight months of 2010 has been a strong period for fine wine investment, with all of the major Bordeaux-dominated funds posting impressive performance figures (Noble Crus is Burgundy dominated). If we look over a longer time period, we find similarly good results, with only those who had invested money immediately before the 2008 downturn sitting on losses (and even here some funds have shown increases).

Of course, with a number of different base currencies, fund structures and valuation methods being used, direct comparisons are difficult – there is no equivalent of Reuters Lipper to help when making wine fund performance comparisons.  The strong recent performance of the Fine Wine Geared Growth Fund, for example, is largely due to the fact that it is heavily geared, so its initial losses and subsequent recovery are exaggerated. Nevertheless, this gearing has ensured that FWGG is the only fund to outperform the Liv-ex Fine Wine 100 Index this year, having risen in value by 38.6%, ahead of the index’s rise of 25.7%. Other top performers include the Fine Wine Fund, the Wine Investment Fund and the (dollar-based) Fine Wine Investment Fund, all of which have posted returns of more than 20% over the past twelve months.

After a difficult few years, the fine wine investment sector is now showing robust growth – both in terms of the size of the established funds and the number of wine investment providers (both institutional and otherwise). Eighteen months ago we stated that “a common and transparent valuation methodology” was needed. Since then the Liv-ex Mid Price has been adopted by a host of new and existing funds and we continue to believe that it provides the most robust methodology for pricing fine wines.

Comparative fund performance 

All data to  31st July 2010 / YTD: 1st Jan 2010 to 31 July 2010
Fine Wine Investment Fund: Base currency is dollars. NAV converted to GBP on a month-by-month basis.
Vintage Wine Fund and Nobles Crus: Base currency is euros. NAV converted to GBP on a month-by-month basis.
The Wine Investment Fund: Across all tranches, net of fees.
Figures for Nobles Crus and FWGG exclude upfront fees of 4%.