Where the wealthy are investing their money?

[Matthias R WHT]

Wine, rare coins and Guiness memorabilila: alternative investments,
for the cautious or less financial solvent, are booming


Wealthy investors are once again turning to commercial property and,
with economic anxiety easing, are also seeking more esoteric ways to
generate returns, such as fine wine and rare coins.

Commercial property prices have plummeted 44% since their 2007 peak,
but big spenders such as Gerald Ronson, the developer, are lining up
to buy shops and offices, confident the only way is up for values.

For those with a little more caution or a little less cash to hand,
alternative investments are proving popular. Alan Brown, chief
investment officer at Schroders, the fund manager, has been buying
Bordeaux wine, while Lord Iveagh has been adding to his collection of
Guinness memorabilia.


Schroders’ Alan Brown has been a collector of fine wines for many
years. Recently he has been buying into red Bordeaux, which accounts
for 90% of the wine investment market.

The Liv-ex 100 index, which tracks the prices of the most sought-after
wines, is down 14.2% on last year. However, the latest monthly figure
was up 4.6% and it is up 10% in the year to date.

To be regarded as a good investment, a wine must have an instantly
recognisable label or a brand with a long track record of quality, and
high to very high prices, according to the website decanter.com. It
should be stored in a bonded warehouse to maintain its quality.

Alternatively, investors can get involved through a fund. The Fine
Wine fund, domiciled in the West Indies and managed by Wine Asset
Managers, is up 4.1% so far this year and has returned 21% since its
inception in September 2006. The minimum investment is £50,000.

Most wine qualifies as a “wasting chattel”, something with a maximum
life of 50 years which will ultimately decline in value. As such, it
is free from capital gains tax.

Remember, though, that wine investment remains a largely unregulated
activity. Anyone can promote themselves as a wine dealer, and there is
nothing in the way of investor protection.



- Melanie Wright. Times Newspapers Ltd. 20 Sep 2009.