Wine Portfolio or Wine Fund
There are differences between a wine-fund and a wine portfolio – each has its merits as well as disadvantages. Based on your (the investors) financial perspective, as well as specific needs and requirements, you may find one is more suitable than the other, especially when looking to optimize your returns with minimal risk.
What is better for you – a wine fund or a portfolio? The answer to this question is likely to be self-explanatory for experienced and professional investors. However, since fine wines are a relatively new avenue for investment, still bearing a certain novelty factor, we will briefly explain the main differences of these investment opportunities below:
- As with any investment fund, a wine-fund is built by collecting capital from numerous investors, all with the same or similar investment objectives. By comparison, a wine portfolio is tailored-made for a specific individual; the portfolio will be compiled with the sole investor’s requirements and goals in mind.
- There are various types of funds; for example, open funds and closed funds. Wine-funds, as a general rule, are always closed. This means that investing through a wine fund will require a binding commitment of between 5 – 10 years. This is a significant factor contrary to wine portfolios, where investors have the option to liquidate their assets and cash in on the profits whenever they want, thus offering more control over their financial portfolios. Although it must be mentioned that fine wine investing is a medium to long term investment, there are situations where a quick sale or lucrative portfolio rearrangement is necessary or desired, perhaps for a short term gain or immense financial return; these freedoms are not offered through an investment fund.
- Investing in luxury wines, as the name suggests, is a luxury investment and therefore may not be suitable for all types of investors. With a starting capital of around EUR 20,000, investors can comfortably test this market with an individually tailored fine wine portfolio. On the other hand, a wine-fund requires a minimum starting capital of EUR 100,000 and upwards. An institutional investor investing this figure into a custom made wine portfolio could potentially achieve a much higher rate of return than through a fund.
- Transparency is a huge factor when dealing with wine funds and wine portfolios. With a personal wine portfolio investors are always fully aware as to which wines are being purchased, at what price, when and even why. The same goes for when those fine wine assets are liquidated, whereby investors are always fully informed about their holdings, past, present and potential future assets. Wine-funds on the other hand cannot offer such a level of transparency with their business transactions. Investors are certainly kept up to date regarding their assets through a NAV (Net Asset Value), but in comparison, no such details are disclosed to investors as to which, when and why these particular wines were selected.
At Bordeaux Traders we only handle individual tailored fine wine portfolios on behalf of our investors, always taking their personal investment objectives into consideration. Whether a wine portfolio or a wine fund is more appropriate for your needs remains a decision that ultimately lies in your hands; however, as experts in the field of wine investment, we will gladly advise you in the right direction.
Get in touch today to receive a free consultation regarding your investment requirements.
Bordeaux Traders - The Fine Wine Investment Brokerage GmbH
Kaerntner Ring 5-7, 1010 Vienna
Phone: +43 1 20511 60 1241
Fax: +43 1 20511 60 1008