Fine wine has continued to outperform equity markets in the first half of 2022. The Liv-ex Fine Wine 50, which measures the performance of the 50 most sought-after fine wines in the world, has risen 3.0% since the beginning of 2020, while the FTSE100 has declined 2.6%. This demonstrates that fine wine is a sound investment for those looking to safeguard their wealth during these uncertain times.
A low volatility market
Compared to other markets, the fine wine market has been relatively stable in recent years. This is due to a number of factors, including the fact that fine wine is a physical asset with limited supply, and that it is often stored in bonded warehouses, which provides an extra layer of security. In addition, the majority of fine wine transactions take place between private individuals, rather than on public exchanges, which also contributes to its stability.
The first half of 2022 has seen this trend continue, with the Liv-ex Fine Wine 50 Index remaining relatively flat. This is in contrast to other markets such as the stock market, which have seen significant volatility. The stability of the fine wine market makes it an attractive investment for those looking to diversify their portfolio.
Despite the relatively stable performance of the fine wine market, there are still some risks to consider. The Liv-ex 50 has seen its positive momentum slow, and, while the index’s volatility is currently under 0.5%, it has shown signs of increasing in recent months.
The slowdown in the fine wine market’s momentum, coupled with its increased volatility, means that investors should tread carefully in the second half of 2022.
However, the market’s stability makes it a good choice for those looking to diversify their portfolio and reduce their exposure to more volatile markets.
As a side effect of a slight increase in uncertainty in the markets, we have seen an uptick in the number of people looking to buy wine as a way to store value.
While this has been most notable for blue-chip wines such as Jacques Selosse and Pétrus, it is a trend that is being seen across the board.
Clos du Marquis 2009 remains the top-traded wine by volume in the first half of 2022, followed by Domaine de la Romanée-Conti La Tâche 2006 and Château Mouton Rothschild 2018. All three wines have seen an increase in trading activity compared to the same period last year.
With fine wine outperforming equity markets so far in 2022, it is clear that it is a good choice for investors looking for stability. However, with the second half of the year still to come, it is important to tread carefully and not get too overexposed to this market.