Subscriber login Close [x]
remember me
You are not logged in.

Investors to look to "safe haven" fine wine post-Brexit

Published:  15 August, 2016

Over one in four wealth managers and independent financial advisors expect appetite for wine investing to increase over the next 12 months as the impact of Brexit drives fuels greater demand among investors.

According to new research from fine wine investment specialists Cult Wines, 27% of those who took part in the study said that they expect to see more investment in fine wine as investors look for asset class diversification and "safe havens".

Since the UK decided to leave the EU in June, the Liv-ex Fine Wine 100 index - the industry benchmark - gained 3.6% to close on 269.07, which was the largest positive monthly movement since November 2010 and it's the highest level since August 2013.

For the week following Brexit, Cult Wines' trade sales increased by 106% on the pre-referendum average figure in June.

This trend has continued with strong demand from US and Asian investors spurred by the fall in sterling against the US and Hong Kong dollar.

With reduced returns forecast over the next few years from mainstream asset classes such as such as equities and bonds, the fine wine market is becoming increasingly attractive due to its capacity to offer medium to long-term returns.

The fine wine sector is currently worth over $4 billion a year.

Tom Gearing, managing director at Cult Wines, said: "Intermediaries are clearly seeing increased levels of interest in wine and in light of market volatility and poor returns. It is being recognised as a genuine alternative asset class, providing significant diversification benefits from mainstream financial markets. Not only can the sector provide strong returns under expert guidance but it is an enjoyable, collectible, tangible asset that has a very exciting future."

The research also revealed that two in three (65%) intermediaries believe the fact that fine wine is an unregulated asset class is the key challenge affecting the growth in popularity among high net worth retail investors.

"As an unregulated market, investors need to ensure they do their own due diligence and only use reputable companies," Gearing continued.

"We have introduced our own unique procedures when working with intermediaries to protect their clients' assets at all times. There are also benefits of the market being unregulated as it allows investors greater flexibility with regards to ownership and structuring, as wine is an easily transferable asset, as well as offering tax benefits as its regarded as a wasting asset by HMRC."