Comparing Fine Wine Indices and Equity Indices: Performance Over Recent Years

May 14, 2024

Comparing Fine Wine Indices and Equity Indices: Performance Over Recent Years

In a significant move within the financial services industry, BlackRock and Hargreaves Lansdown have announced a merger aimed at launching a series of multi-asset index funds. This strategic partnership combines the strengths of BlackRock, the world’s largest asset manager, and Hargreaves Lansdown, the UK’s leading investment platform for private investors.

While the merger between BlackRock and Hargreaves Lansdown marks a pivotal development in the financial sector, it’s also worthwhile to examine how alternative investment vehicles, such as fine wine indices, have performed in comparison to traditional equity indices over recent years. This is demonstrated in the graph below:

Fine Wine Indices

Fine wine has long been considered a stable and appreciating asset, often unaffected by the volatility that plagues stock markets. Over the past decade, fine wine indices, such as the Liv-ex Fine Wine 100 and Liv-ex Fine Wine Investables, have shown remarkable resilience and growth. These indices track the price movements of highly sought-after wines from renowned regions like Bordeaux, Burgundy, and Tuscany.

Stability and Low Correlation: Fine wine indices have displayed low correlation with equity markets, providing a hedge against market downturns. During periods of economic uncertainty, such as the global financial crisis and the COVID-19 pandemic, fine wine prices have remained relatively stable or even appreciated, while equities often experienced sharp declines.

Consistent Appreciation: Historically, fine wines have demonstrated consistent long-term appreciation. For instance, the Liv-ex Fine Wine 100 Index has delivered an average annual return of approximately 8-10% over the past decade. This growth is driven by the limited supply of high-quality wines and increasing demand from affluent collectors and investors globally.

Inflation Hedge: Fine wines also serve as a hedge against inflation. As inflation erodes the purchasing power of cash and fixed-income investments, tangible assets like fine wine tend to retain or increase their value.

The merger between BlackRock and Hargreaves Lansdown represents a significant advancement in the accessibility and management of multi-asset index funds, catering to a growing demand for diversified investment solutions. Meanwhile, the comparison between fine wine and equity indices over recent years underscores the importance of diversification in investment portfolios. Fine wine indices offer stability and consistent appreciation, serving as a hedge against market volatility and inflation, while equity indices provide the potential for higher long-term returns and dividend income.

Moncharm Wine Traders offers the latest news and insight into current investment opportunities and how wine investment can help you gain profitable returns. To find out more about how your investment portfolio could benefit from diversifying into fine wine, contact us today below.