Wines From the Vineyards of Bordeaux Make The Best Wine Investments
Wine Investing 2010 Performance...

Although the fine wine investment market is hardly immune to downturns, it has historically been one of the last to get hit and the first to recover when the economy tanks, as can clearly be seen during today’s economic quagmire. While stock markets worldwide continue to suffer, the Liv-ex 100, fine wine investing’s benchmark index, is at an all-time high - up 38.7% as of December. The Claret Chip index, comprised of only top-rated Bordeaux First Growths only was up 4.95% to 405.10 in November. The index is up 50.75% year-on-year and up 49.24% year-to-date. When comparing the Claret Chip index to the FTSE 100, investors who without any Lafit or Margaux in their portfolios are going to be sadly disappointed. Even the Live-ex 500 and Fantasy Cellar have shown decent performance when compared to their traditional investment counterparts.

Fine wine’s stellar performance exists for several reasons. Wine improves with age, but with age supplies are reduced as it is consumed. Supply is also restricted on the top wines due to France’s strict quality laws limiting the best chateaux’s yearly production. Fine wines also offer many tax benefits when stored in bond. Under certain conditions they are free from capital gains tax, as Inland Revenue considers them wasting assets (consult your accountant and lawyer for specifics).

In recent years, demand for fine wines have constantly been boosted by ever-increasing demand from Asia as new wealth is created in China, India, and Russia. Although investors have probably heard this over and over, this reason cannot be emphasized enough. With Hong Kong completely eliminating its enormous 40 percent duty on fine wines in 2008, wine imports have risen a whopping 88 percent! Imports to the region have rise from 41 percent to £331 million. Second to New York, Hong Kong has since replaced London in the number two position of the world’s top wine-auction markets.

These reasons alone make it clear to see that fine wine investing’s performance is rapidly gaining more and more attention by new and old investors alike. With 2010 having demonstrated outstanding performance in the fine wine sector, investors can look forward to more of the same in the upcoming year.