Fine Wine Market Performance

fine wine market performance and wine investment analysis

Fine Wine has outperformed almost every other major financial index over the past two decades; below we have provided some market analysis of the long term performance of fine wine.

 

  • Outperformance of FWI versus World Equities

The most convincing factor of the viability of fine wine investment to provide absolute returns to investors is that wine has produced positive absolute returns in every single 5-year holding period since the first period in record (‘dec-99 to dec-04’) except until the last two data points.

When compared with global equities, FWI outperformed 98% of the time over any 5-year investment horizon since December 1999 until our last data point.

Outperformance of FWI versus World Equities

 

 

  • FWI gives diversifying benefits to a portfolio of Global Equities

Besides outperforming Global Equities in investment returns, FWI also gives diversifying benefits as the correlation of the fine wine market to Global Equities is only 0.19.

FWI gives diversifying benefits to a portfolio of Global Equities

 

 

  • Fine Wine returns becomes less volatile over time

The Liv-ex Fine Wine Investable Index tracks the most "investable" wines in the market and provides reliable data back to 1988. The graph below has taken this data and analysed the Compound Annual Growth Rate (CAGR) for a 5 year, 7 year and 10 year hold in order to demonstrate likely performance behaviour.

Fine Wine returns becomes less volatile over time

 

7 Year CAGR (since 1988)

Min Returns 

-0.5%

Max Returns 

26.2%

Average Returns 

14.6%

Standard Deviation 

7.2%

 

As the above table and graph demonstrate, fine wine returns becomes more consistent and less volatile the longer it is held. This occurs as a result of the fundamental principles that drive fine wine prices – a demand/supply imbalance.  Fine wine has a perfectly inverse supply curve which is exacerbated over time as the available wine is consumed and diminished.

 

To learn more about fine wine as an investment class and how it could help you reach your investment objectives please get in touch, or for further reading material – download a copy of our free wine investment guide by filling in the form on the right hand side of the page.

 

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