Wine Fund
Established in 2003, with an annualised average paid out annual return of 14.5% (net of fees), our client is the world's leading wine fund. Currently the manager has over £50m under management. The manager achieves lower volatility (typically less that 10%) through its own investment strategy, generating strong risk adjusted returns, as is demonstrated by its Sharpe Ratio of approx. 1.3.
The Fund invests in, and holds, physical stocks of limited production, superior quality wines of very good to outstanding vintages from the Bordeaux region of France. Diversification is achieved by investing in a selection of producers and vintages and a proprietary model is employed to select wines considered most likely to increase in price over the investment term.
Wines are held in secure, professional wine storage facilities in UK government bonded warehousing and are insured at market value (subject to policy terms).
The Fund is an unregulated collective investment scheme as defined by FSMA and is therefore only suitable for eligible persons and sophisticated investors, high net worth corporate and unincorporated bodies and trusts, family offices and eligible counterparties and professional clients.
Investors may access the Fund either through a UK limited partnership (LP) structure or via a Bermudian mutual fund structure. The LP benefits from the wasting asset rule, and as such gains are exempt from CGT. Both structures collect subscriptions on a Tranche by Tranche basis, each Tranche having a 5 year life. The LP does not allow redemptions whilst the mutual fund allows for redemptions at will. The mutual fund may be ideal to be held in SIPPs.
The minimum investment into either structure is just £10,000.
Structure: Bermudian Incorporated Mutual Fund
Annualised Return: 14.5%
Term: 5 years
Redemption: At will (at NAV, pay-out within 60 days)
Base Currency: Sterling GBP
Min Investment: £10,000
Subscription Fee: 5%
Management Fee: 1.5%pa (fixed, not on increasing NAV)
Performance Fee: 20% of profits on maturity
Investment Adviser: Contact Us – Available only to eligible persons and regulated advisors
Administrator: Contact Us – Available only to eligible persons and regulated advisors
Auditor: Contact Us – Available only to eligible persons and regulated advisors
Valuations: Independently by Liv-ex, the fine wine exchange (www.liv-ex.com)
NAV: Calculated monthly
Reporting: Quarterly
Performance: Last 3 months -3.6%
Performance: Last 12 months 14.0%
Performance: Last 3 years 24.5%
Performance: Last 5 years 85.2%
Performance correct as at 30 Aug 2011
Fine wine is an asset class that many of us can relate to, and possibly to some extent have invested in directly. The questions to this approach however are:
On what investment criteria are we purchasing cases?
Are we buying at the best possible price in the market?
How do we monitor the market to exit at the optimum value?
The asset class however is non-correlated to equities, and historically has shown steady long term growth with relatively low volatility. Ultimately a diversified portfolio of investment grade wine, managed by a proven, skilful and highly knowledgeable manager with significant analysis resources and risk management expertise may fit in many portfolios.
The fact that investment in wine benefits from the “wasting asset rule” means that the returns generated from the Limited Partnership are free from capital gains tax (CGT) is a significant benefit for onshore investors who are not holding the investment within a tax wrapper such as a SIPP.
The manager has an institutional approach to managing this asset class with risk management firmly at the core of their investment strategy. The key members of the management team have strong investment track records across multiple asset classes previously, and view fine wine simply as an asset class, as opposed to coming at it from connoisseurs perspective, removing any emotional attachments to any particular wine, chateaux or vintage per se.
The investment style is based on a buy and hold strategy, with the portfolio being rebalanced on a quarterly basis. The manager reduces volatility further by avoiding investment into en primeur wines which is demonstrably shown to be more volatile, with typically lower returns than investing in more mature wines.
For further information on this exciting fund or to schedule a meeting to meet the manager, please contact us
