A new wine investment fund has just been launched by OWC Asset Management, a company regulated by the UK Financial Services Authority.
The fact that its parent company is regulated by the FSA, a UK government agency set up to control all companies offering investment advice, gives the Vintage Wine Fund (VWF) an advantage over its competitors.
‘Other wine funds are not subject to the same financial restrictions,’ director Gary Boom said. ‘They can put any valuation they choose on their fund.’
He also suggested that merchants who offered wine portfolios were not offering the best advice to clients. ‘Their aim is to move stock and not necessarily construct the best portfolio.’
A spokesman for the FSA stressed that the fact the firm is authorised to carry on investment business does not mean the fund itself has the Authority’s approval.
But investment community insiders have expressed interest in a wine fund that has been opened by a credible firm.
OWC is seeking to raise €50m (£32m) by January 2003 to invest in fine wines. The fund is targeting private investors rather than institutions and subscriptions start at €100,000 (£63,600).
Sixty per cent of the fund is likely to comprise red Bordeaux, while one fifth will be Burgundy. The rest will be mostly be made up of wines from the Rhone Valley, California and Australia.
‘Our objective is to source wines at the best prices and use rigorous portfolio management techniques to provide an annual return of around 15%,’ Boom said.
This would compare favourably to the disappointing performances of international stock markets. ‘Wine has enjoyed returns of 12% per annum over the last twenty years and displays lower volatility than the main equity markets,’ Boom said.
In general the wine investment market remains unregulated. Over the last decade, this situation has enabled a rash of fraudulent drinks investment companies to defraud millions of pounds from investors.
Written by John Stimpfig21 November 2002
