ODL, Liv-ex: new wine futures spread betting scheme launched June 13, 2008
Richard Woodard
A new 'wine futures' spread betting scheme could help investors to cash in on the booming international market in fine wine – without having to buy a drop.
ODL Markets, part of trading house ODL Securities, is offering investors the chance to place spread bets on the future value of the Liv-Ex 100 exchange, an index which follows the benchmark values of 100 of the world's most sought-after wines.
Participants bet a fixed amount per point of the index that it will go up – or down – on a quarterly basis. All gains are tax-free.
The move comes as more and more people consider wine as a serious financial investment amid the current turmoil in the world's financial markets.
Liv-Ex 100 gained 7.7% in the year to the end of May, while the FTSE 100 lost 6.3%.
Liv-Ex founding director James Miles said ODL was planning to expand the scheme to include spread betting on the values of individual wines, such as Château Lafite 2005 and Château Latour 2006. 'Again, you're betting that the wine will close higher – or lower – in three months' time,' he said.
One of the benefits of the scheme was that there were no costs related to storage or auction fees, and no fears over provenance.
Miles said that collectors might use the futures betting to 'hedge' against potential falls in the value of their top wines. So, if they were concerned that the fine wine market was about to fall, they could place a bet to that effect, thus covering potential losses in the value of their wines.
'To start with it's going to be quite small, but I think it's inevitable that this area will grow,' said Miles. 'Only about 2% of the transactions in any commodity are ever physically delivered – and often it's less than 1%. But with wine, until now, it's been 100%.'
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Isn't en primeur enough of a gamble?
Anthony Rose, London, UK
This has no more to do with wine, than spread bets on when the first throw-in will be, have to do with football - this just uses the fine wine market as a handy marketing gimmick to atttract punters. As far as I can see, no wine is ever even bought or sold? I have serious doubts as to whether this will attract anyone serious about wine - it seems to be designed for gamblers.
If you want to gamble on the price of 2005 Lafite, buy a case - that way, if the market collapses, you can always console yourself by drinking it.
Martin Bove
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