Wine investors set to experience decent returns

Investors in wine should expect a fruitful year as the main fine wine index, the Liv-ex 100, looks set to return more than 15 per cent for 2009 with even higher gains predicted for 2010.

 Meanwhile, according to fine wine investment specialist, Andrew della Casa, director of The Wine Investment fund, this index for wines such as Bordeaux is predicted to finish even higher in 2010 at 280 – an increase of 18 per cent on 2009.

Mr della Casa said: "2009 was a great year to be invested in fine wine.  As market conditions continue to look solid, 2010 could be even better. 

"Demand has remained strong in Asia and is returning in the traditional North American and European markets as economies recover."

Bordeaux looks set to remain the bedrock of the investment market, and some vintages of Chateau Lafite have risen more than 50 per cent in 2009. 

This is because of strong demand for finite supplies of the top clarets. 

By contrast, Champagne has seen prices slashed in recent weeks because of an over supply.

Fine wines have had a steady year with 11 of the 12 months showing increases; there was only one small fall in March. 

This lower volatility by comparison with other assets such as equities, oil and gold coupled with its lack of correlation with the rise and fall of these other assets, can help to reduce risk as part of an investment portfolio.

Mr della Casa said: "Independent studies, as well as our own research, show that prices for top Bordeaux have risen on average by 12 per cent to 16 per cent per year since the early 1980s.

"But when the world economy is growing, prices can rise much more quickly.  We saw 40-50 per cent annual rises in 2006 to 2007. 

"We wouldn't rule out this sort of boom in 2010, but we think it is more likely that prices will rise by a little above the long-term rate."

The Wine Investment fund, which has a minimum investment of £10,000, buys wine that is at least four-years-old and invests in wines from the finest 40 Bordeaux chateaux. 

It aims to generate double-digit annualised returns after all costs.