2015 marked the least volatile year for the fine wine market for some time, according to the two monthly indices, ending 2015 on a lively note with the main indices rising in December
The past five years have been a struggle for commodities overall. Of the 22 physical assets tracked in Bloomberg’s Commodity Index, the only asset that rose in 2015 was cotton with the remainder of the index falling by 25%. Gold was down by 12% and oil by 33%, making it a difficult year for commodities. Despite this challenging year, wine managed to stabilise with fine wine prices on the Liv-ex 100 increasing by +0.6% and the Liv-ex investables by +0.4%, a positive end to the year with the market set for optimism.
Andrew della Casa, director of The Wine Investment Fund, noted “After five difficult years we are naturally cautious about prospects for 2016.” That being said, he highlights reasons to be optimistic. “US interest rate rises bode well for the fine wine prices. In the market itself, the anomalies caused by China’s entry and withdrawal have disappeared. The general trajectory of prices – a flat 2015 after four years of falls – suggests that the next move may be up”.
The Wine EIS Company
The Wine EIS Company, asset-backed investing in fine Bordeaux wines, is looking to build on 2015 and the cautious optimism for 2016. The Company adheres to a tried and tested investment philosophy that has been followed since 2003. En primeur and wines nearing the end of their drinking window are excluded with the intention of reducing ‘liquidity’ risk.
The Company leverages the liquidity of the top Bordeaux wines including their unique combination of limited supply and active secondary market. With the assets stored in UK government bonded warehousing with insurance at market value, the Company looks to benefit from a stabilising market.
Investors in the Wine EIS Company benefit not only from an asset backed investment with an established company, but also from the cocktail of tax benefits associated with the EIS including 30% income tax relief and carry back, no CGT on gains, no IHT and CGT deferral, providing downside protection.