fine wine funds
Name of fund manager, flagship fund(s) Domicile, type of fund, Size Min inv Launch date
stock market listing (if any)
OWC asset Management, Scarborough, uK Cayman Islands domiciled, open-ended €86m €250,000 20 feb ’03
(Vintage Wine fund)
anpero Capital (flagship is Wine Investment Main fund closed with redemptions ‘at will’; £45m £10,000 Original fund ’03
fund, others include Veritas Wine fund, various domiciles (since liquidated)
Korea bordeaux Wine Investment)
arch financial Products, london guernsey closed-end incorporated cell company, – 1 share 1 Jan ’08
(arch fine Wine IC) listed on Channel Islands Se (c. £1.07)
Vinum Investments, Sevenoaks, Kent guernsey-domiciled open-ended fund c. £5m £/€10,000 a class, apr ’07; b class,
(Vinum fine Wine fund PCC) July ’08; euro share class
yet to be launched
Port funds, Caymans-based with offices Caymans open-ended fund, traded monthly auM not $/€1m (inst) relaunched July ’08
in asia (Wealth and fine Wine fund, a fOf) disclosed* $/€20k (retail)
Premier Cru fine Wine Investment Mgt Open-ended, uK-domiciled £20m- £5,000 Comp incorporated ’95
(bespoke wine p’folios for individual clients) £25m
lunzer Wine Investments (launching an funds will be closed-ended – £500k (instit) 1 Dec ’08 (instit)
institutional wine fund, retail wine fund and £100k (retail) May ’09 (retail)
segregated portfolio business for ultra-hnWIs)
passion investments ’07 by region ($)
%
100 Miscellaneous
80
60
40
20
0
Luxury collectibles
Global US Europe AP Lat Am M East
Source: Capgemini/Merrill Lynch Fin’cial Adviser Survey, June ’08
their eggs into one basket.
But to not include wine, or
not to take it seriously, is
almost a sin.”
l Wasting away
One advantage for UK
investors with a fondness
for the grape is the fact
that any profits they make
on their wine investments
are free of both income
and capital gains tax, since
both the Inland Revenue
and Capital Taxes Office
quirkily regard wine as a
‘wasting asset’.
Another enduring attraction
of both wine and art is
that supplies of the best are
severely limited, those who
favour them as investments
note. They are not making
Sports investments
Other collectibles
Wellness
Luxury consumables
Luxury travel
Jewellery
Fine art
more land in the Bordeaux
region of France on which
to grow grapes, just as
they are not making any
more 19th-century French
Impressionist paintings.
Then too, in the case of
fine wine, every day that
passes means a few more
bottles have been drunk,
leaving fewer in that
vintage for re-sale, thus
making those that remain
more valuable.
“Touch wood, we have
not had one single request
for a redemption from any
of our funds, at least that I
am aware of,” says Rodney
Birrell of Anpero Capital, a
London-based fund house
which manages about £45m
in its various wine funds,
including the flagship Wine
Investment Fund.
At the Fine Art Fund
Group, chief executive
Philip Hoffman says the
unique nature of the pieces
his firm handles has managed
to keep his funds
doing well and within
their target compound rate
of return of 10% to 20%,
even as the market has
softened.
Even on 15 Sept, the
day after Lehman Brothers
declared bankruptcy in
New York and sent stock
markets around the world
plunging, Hoffman says he
bought a painting for $4.9m
and sold it a few hours
later for $6m, a result he
attributes to the artwork’s
rarity which enabled it to
retain its value even as billions
were being wiped off
the balance sheets of the
some of the world’s biggest
blue chip corporations.
Like Birrell, Hoffman
sees the softness in the
market more as a buying
opportunity than a cause
for concern, even though
it may affect returns in the
short term. This is because
his funds are lightly invested
at the moment, a situation
he attributes to chance
rather than to foresight.
“In our main funds we
are something like 70%
DEcEmbER 2008 [www.portfolio-adviser.com] PORTFOLIO ADVISER
Viewpoint inVestments of passion
in cash, putting us in an
almost vulture-fund situation,
while our newest
fund, the Middle Eastern
Fine Art Fund is still 98%
in cash,” he says.
l Expanding universe
Hoffman’s fund dates back
to 2003, making it one of
the oldest of the funds specialising
in investments of
passion. Few wine funds
date back much beyond
2006. But even as the conventional
funds industry is
contracting, the art, wine
and collectables funds
sector is continuing to
expand.
Wine expert Peter
Lunzer, formerly of rival
Anpero, is launching a
new wine fund on 1 Dec,
while Port Funds is introducing
a new Fine Arts
& Collectables Fund on 1
Jan, 2009, to invest in such
assets as investment-grade
guitars, stamps, coins and
classic cars. Castlestone
Management is said to be
mulling a fine art fund.
As Port Funds’s Gary
West explains: “Our message
is that equity markets
no longer have the right
to demand first place in
a portfolio any more, particularly
now.”
“ An enduring
attraction of wine
and art is that
supplies of the
best are severely
limited. They are
not making more
land in the Bordeaux
region of France
on which to grow
grapes, just as they
are not making any
more 19th-century
French Impressionist
”
paintings
sUmmaRY
Wine, fine art and other
‘passion’ investments are
often seen as an alternative
investment, benefiting from
their lack of correlation to
equity markets.
The global financial crisis
has seen a drop in the assets’
values, although there is also
an increase in sell-offs
bringing potential bargains
onto the market.
Some still see a buying
opportunity shaping up in
these softening asset classes
given that they are correlated
after all.
23
To view a Ceros magazine you need to have JavaScript enabled in your browser and have the flash player 8 or higher installed. To install the latest flash player, click the icon above, install the flash plugin and then click here to refresh this page.