Cashing in on liquid assets

19 September, 2008

Investments in wine are proving more profitable than FTSE-100 shares - but the market's catching on

Wine investments are offering a more reliable return than FTSE-100 shares, according to latest figures.

A 100 investment in a leading stock a year ago is typically now worth around 80, but the same sum invested in fine wine would have yielded a 10 profit, according to data from Liv-Ex, which monitors prices of leading wines.

Director Justin Gibbs predicted that more investors were likely to consider putting their money in wine. He warned that as such investments became more common, the performance of the Liv-Ex index might start to mirror traditional markets - but added that well-planned wine investments were expected to continue to do well.

"For medium to long-term investments, if you do it carefully and you buy the right wines it's always shown a steady return," he said.

Although the Liv-Ex 100 index plateaued in August, Gibbs said it was merely "taking a breather".

He added: "There are some professionally managed wine funds but they're only up to five years old and fine wine investment is really in its infancy. There

will be more as people are looking to diversify their asset bases, which will put medium term pressure on prices."

The most recent Liv-Ex trading statement reported a "record level of turnover", adding: "Along with strong demand from traditional merchants in the UK and elsewhere, new investment capital continues to enter the market - presumably seeking calmer waters away from the volatility of equities and the commodity markets."

Sussex wine merchant Peter Rehberg, of Hailsham Cellars and Winedirect, said that for those who bought 2005 Bordeaux en primeur, mark-ups were 100%.

But he urged caution. "I think the market has gone totally mad, and at the moment Asia is buying a lot of wine," he said. "If you buy first-growth wine you can't lose

but for most wine investments if you're buying now I think you've missed the boat.

Prices are astronomical.

"My advice is

buy to drink, if you can afford it."

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