UK wealth managers see demand for fine wine comfortably outstripping other passion assets, such as watches, luxury handbags, and art, new research from fine wine investment platform WineCap shows.
The study – conducted among 50 UK-based wealth managers and financial advisers who only deal with high-net worth clients (£100K+) – revealed that fine wine will attract most demand from investors over the coming year amongst all leading passion assets, with 96% expecting demand to increase, of which three out of five (60%) said that it will increase “significantly”.
This placed fine wine comfortably ahead of watches (86%) and luxury handbags (80%) in second and third place respectively. Other well-established passion assets such as art (68%) and classic cars (62%) placed much lower in sixth and tenth place.
Fine wine now featuring in many client portfolios
The report, Fine Wine: The Journey from Passion Asset to Mainstream Asset Class, found that fine wine is already featuring prominently in many wealth managers’ client portfolios. UK wealth managers and advisers estimated that over 40% of their high-net-worth client base invest in fine wine with an average portfolio allocation of around 10%.
Fine wine’s growing prevalence among HNW client portfolios provides compelling evidence, if any is needed, that it has graduated to a genuine alternative asset, a highly effective portfolio diversifier, operating alongside other popular alternatives such as hedge funds, real assets, and private capital as well as mainstream assets such as fixed income and equities.
In common with other alternative assets, fine wine tends to feature more prominently in larger portfolios belonging to more sophisticated investors where there is a greater premium on diversification. Almost all respondents (98%) said that clients investing in fine wine are mainly experienced investors, with 62% saying they were “very experienced”.
Alexander Westgarth, CEO at WineCap said: “Fine wine has long been seen as a ‘passion asset’ – a fun and exciting yet niche investment option for connoisseurs and hobbyists. But over the past few years, characterised by increased market and economic volatility that have destabilised traditional assets such as equities and bonds, perceptions of fine wine have evolved from a passion asset into a mainstream alternative asset.”
The fact that fine wine has received such a positive reception from wealth managers, whose success relies on advising clients on making the right investment decisions, is a testament to its growing appeal, Westgarth said.
As the investment climate becomes even more challenging, squeezing returns from traditional assets, fine wine’s appeal as an effective portfolio diversifier will continue to grow. The sector has also further professionalised and more wealth managers are seeking partnerships with specialist wine investment firms to ensure their clients can gain access to a similarly high-quality service with full price transparency.
