Investing in wine can involve buying shares in a managed fund or buying bottles or cases individually. Managed wine funds offer expertise and diversification, potentially leading to high returns. Private investors can also benefit, but there are risks involved. Wine funds can help reduce risk, but buying privately allows for drinking the investment if things go awry. Investing in wine can be satisfying for oenophiles.
Investing in wine can involve buying shares in a managed fund or buying bottles or cases individually. Using a managed fund to invest in wine can offer the benefits of specialist knowledge and potentially high annual returns. Wine fund managers typically look not only at the quality of a vintage, but at the original production volume, how much inventory is left, and how quickly similar wines have appreciated. This kind of in-depth knowledge of wine investing can potentially lead to big financial gains. Buying cases and bottles of wine yourself also has its advantages.
A managed wine fund can be a viable investment option, regardless of personal wine taste. Much like a mutual fund, investing in wine through a collective portfolio can offer the benefits of expertise and diversification. A wine fund manager will typically purchase a wide variety of different vintages so that the fund as a whole can remain unharmed if a particular wine drops in value. The returns can be quite good, and the average appreciation of fine drinking wine is about 15% annually over a 50-year period.
Wine funds may also allow investment in particular vintages on speculation. Some wines are highly acclaimed but produced in such small quantities that they may never gain a large following. A wine like this can be highly appreciated for its high quality, or not at all simply because few people get to try it. A well-managed fund may be able to take the risk of buying several cases of that vintage, as the fund as a whole won’t suffer if it doesn’t appreciate much.
Private investors can also see a number of benefits from investing in wine. Unlike stocks and other market-driven instruments, wine tends to be a known quantity that won’t fluctuate in value due to external forces. There can be risks though, since one bad review of a previously valuable vintage could reduce the price people are willing to pay for it. Values can also drop in the face of a bad economy, if people don’t have the money to spend on good wine.
Despite the potentially large rewards, investing in wine can carry many of the same risks as other speculative pursuits. Wine funds can help reduce risk, although buying privately can ensure that the buyer is at least able to drink his investment if things go awry. This can make investing in wine an interesting activity for those who are already oenophiles, as it can offer great satisfaction at best and a cellar full of fine vintages at worst.
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