WINE-FINANCE: LIV-EX FEELS THE CRISIS WHILE MEDIUM AND LONG-TERM “FINE WINES” KEEP THEIR APPEAL. MORE AND MORE OPERATORS WANT THEM IN INVESTMENT PORTFOLIOS LIKE GOLD, SILVER AND ART

Even the great wines are not immune to the crisis and prices have fallen but only in the short term, because “Fine Wines” are one of the best medium to long-term investments in times of financial upheaval, both for low price volatility and for performance. Why? The Liv-ex Fine Wine 50 Index (the index of the best of Liv-ex, the stock market of wine) closed on October 21st at 371.65 points, down 0.20% compared to October 13th, following the 7% fall in September. The index has been down 3.6% since the beginning of 2011, but still up 8.4% compared to 2010.
This is a flurry of figures that explains how nothing is immune to the crisis in the short term, but also that medium- and long-term performances of fine wines - the least volatile component of the “SWAG” (silver, wine, art, gold) group - make them the alternative asset class. Fine Wines then, are still one of the best investments, so more and more people in the business are betting on the potential of wines on the stock market. And, given the extremely fluid situation regarding both stocks and bonds, the English economist Joe Roseman, formerly at Moore Capital Management, claims that investors should strengthen their portfolios with more “SWAG” assets, because in the last decade, they proved much more profitable than stocks themselves. 

According to Roseman, the success of “SWAG” assets is due to the shared characteristics of the group: they are all tied to a tangible activity; they enjoy great longevity (like wine itself, since a Lafite bottle can last 50 to 100 years); they’re not associated with burdensome debts; they’re easily transportable and storable; they are not easily obtained; their performances are not tied to stock markets and a possible default of sovereign funds would not alter their main features one iota. An awesome investment, then, coupling low risks with high returns. And an analysis of the individual performances of “SWAG” in the last 10 years shows that fine wines have done well both from a risk- and a profitability-related point of view. The Liv-ex Fine Wine Investibles Index enjoyed the lowest volatility of all indexes and the second highest return on investment, as of August 2011.
Info: www.liv-ex.com


 Focus - The latest figures of the Liv-ex index
As of September 30, 2011, Liv-ex Fine Wine Exchange Indexes all indicate a minus sign. The Liv-ex Fine Wines 100- which follows the daily movement of prices of the most traded labels on the wine market, the Premier Crus of Bordeaux, including the ten most recent years (excluding futures, currently 1999-2008), with no other qualification criteria applied - sees a 6.4% downward shift to finish the month at 323 points. The index has fallen 4.1% since the beginning of the year but showed a 4.7% increase compared to 2010.
The price increase of Premier Cru seems to have come to a halt, pushing the Liv-ex Fine Wine 50 downward 7% and ending September at 386 points. The index has fallen 3.6% since the beginning of the year but increased 8.4% compared to 2010. The Liv-ex Claret Chip index, calculated weekly - which follows the fluctuations of the Bordeaux Premier Cru points, the “blue chip” wines of the world, including all the wines that have scored 95 points in the past 15 years, particularly according to Robert Parker - ended in September at 386 points, down 8% over the previous month. The index has fallen 6.7% since the beginning of the year, but increased 3.2% over 2010. The value of the Liv-ex Fine Wine Investibles - following the most investibile wines on the market, about 200 wines of 24 Bordeaux châteaux, which reflect a typical portfolio investment performance, with data starting from 1988 – recorded 334 points on September 30th. It lost 4.9% over August and increased 0.2% in 2011 and 10.1% over 2010. 
 Finally, the Liv-ex 500 Fine Wine - that monitors the market price movement for wines from Bordeaux, Burgundy, Rhone, Champagne, Port, Italy and the New World - closed at 286 points, down 2.2%. Since the beginning of the year, the benchmark increased 11.40% and 19.5% compared to 2010.