Wine Portfolio Management
There are really two principal ways to invest in fine wine: wine investment funds and the construction of private wine investment portfolios.
At Cult Wines we offer a leading portfolio management service that allows our clients, no matter what their level of knowledge in fine wine, to profit from the burgeoning global fine wine investment market.
We hope that this page will answer some of the questions you might have about entering this market.
If you have a query that not covered here, feel free to call an advisor at our Richmond office on +44 (0)207 1000 950.
What is included in the Cult Wines Portfolio Management Service?
Our service includes:
Stock selection: Our team of highly-trained portfolio managers adhere to a stringent stock selection process ensuring you have access to the very best investment grade wines. A network of established relationships with a range of UK merchants and Bordeaux negociants, ensures the availability of the very finest wines at optimum pricing levels.
Storage: In contrast to a number of fine wine investment companies whose clients are required to cover the full cost of storage, which can range from £15-25 per case per annum, Cult Wines’ portfolio service covers the full expense of storing your wine, in a privately segregated client account.
Insurance: All wines are completely covered at their current market value for the full duration of your investment.
Handling and administration costs: No hidden administrative or servicing costs, ensuring transparency and peace of mind for our clients.
Portfolio tailoring: We structure portfolios to match the individual investment objectives of each of our clients.
Investment strategy: Our team of portfolio managers have a wealth of experience in the fine wine investment market. Your appointed portfolio manager has access to the most up-to-date market data and analysis available, through our dedicated and highly specialised research team, and is therefore able to advise you on the best possible investment strategy. These strategies are revised on a regular basis as the market develops and weekly updates and regular reviews ensure that your portfolio is working its hardest.
Guaranteed sale of your wine: We are dedicated to selling your stock and we never charge a brokerage fee for this service.
Online Management: Clients benefit from the ability to access and view their wine portfolio online, tracking its growth whilst viewing live valuations and reading the latest market reports.
How much will this service cost me? How is it applied?
Cult Wines Ltd charges a 15% portfolio management fee with each new purchase of stock. This fee covers all the portfolio management services summarised herein for the term of the portfolio. We do not levy any selling commission or brokerage fee.
Will I have a dedicated portfolio manager?
Each of our clients is assigned their own dedicated portfolio manager who will have sole overview of their portfolio and thus be able to construct a tailored investment strategy. You can learn more about the Cult Wines team here (hyperlink ‘Meet the Team’).
What level of contact can I expect from my portfolio manager?
We know how much our clients value maintaining open and transparent investor-manager relationships.
This is why we keep all our clients ‘in the loop’ with weekly newsletters and market updates via email. Your portfolio manager will also maintain regular contact, through regular reviews on the state of your holdings.
Clients also benefit from the ability to access and view their wine portfolio online. Through our online portal you can request a review, place a sale order or read the latest market reports.
What is the minimum investment?
There is no minimum investment level required to use our services, and we can tailor portfolios to suit almost any level of investment. However, we do recommend £5,000-£10,000 as the optimum starting point. This will allow you to build a diverse, balanced portfolio, and to access stock with the greatest potential for growth.
What wines will I be investing in?
Your dedicated portfolio manager will discuss your available investment level and will propose a portfolio comprised of wines designed to match your investment objectives. The majority of stock held by our clients is from the investment-grade top chateaux of Bordeaux, wine that remains the backbone of this market (86% of trade on Liv-ex by volume, as of 2012). Your manager will also explore options for portfolio diversification with you, with investment grade wines from Burgundy and Italy.
Is there a minimum period I must hold the wines for?
Generally, we urge investors to set a minimum 3-5 year horizon for their portfolios in order to benefit from a typical market cycle, with an optimum term of 5-10 years.
However, should you wish to sell your wines at any stage, we will liquidate stock upon request. Cult Wines do not levy any early redemption or cancellation charges at any stage.
What are the likely returns on a typical Cult Wines investment portfolio?-
Historically fine wine has returned 12-15% per annum over a typical five-year term (Liv-ex data since 1988). Our team of portfolio managers are targeted with outperforming this average market performance with 15%+ annual growth over the same term our primary objective.
Who holds my wines? Where are they kept?
Client reserves are held at London City Bond, a bonded-warehouse based in Tilbury, Essex.
Storing wines in a bonded warehouse such as LCB ensures perfect provenance, allowing your wines to achieve the best possible returns when it comes to selling stock. Wines stored in this way are VAT-exempt.
LCB is the largest and oldest bonded warehouse in the UK, storing wines in a managed optimum climate where temperature and humidity are regulated to keep wines in perfect condition. You will receive documentation certifying you as the sole owner of the wines. If as a client you would like to see the wine, we can arrange condition checks and photos or a personal visit so that you can check the stock onsite yourself.
If you already have your own storage account or would like to arrange an alternative storage solution, we will be happy to make the necessary arrangements.
Furthermore, if you would like your wine to be held outside the UK, we can make arrangements on your behalf through our current international logistics partners.
For more information about storing wines in bond, please visit our Storage and Provenance (link to ‘Storage and Provenance’ page) page.
How ‘tax-efficient’ is fine wine really?
Client wine reserves stored in bond are VAT-exempt as they are considered ‘in-transit’. If you decide to remove your wines from a bonded warehouse they will become liable for VAT and Excise Duty.
We always recommend discussing new investment with your tax adviser, to ensure you can benefit most fully from fine wine investment.
Generally, fine wine is considered a ‘wasting asset’ and thus is exempt from Capital Gains Tax (CGT). For more information on fine wine, CGT and Inheritance Tax, please visit our Tax Considerations (hyperlink ‘Tax Considerations’) page.