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The Nobles Crus wine fund has been suspended due to a lack of liquidity.
‘Considerable sums of money’…Elite Advisers
The Luxembourg Commission de Surveillance du Secteur Financier (CSSF) temporarily suspended the fund on 27 May. It is not allowed to pay out redemptions or accept new funds.
Due to recent changes in European law, as of 31 December 2013, fund managers running unit trusts will not be allowed to invest in wine funds and other alternative investments.
This has led a number of Nobles Crus’ institutional investors to sell their holdings in the fund.
Miriam Wilson and Michel Tamiser, general partners in Noble Crus’ parent company Elite Advisers, have told their investors that ‘Nobles Crus now finds itself confronted with a few requests from some large institutional for redemptions involving considerable sums of money.
‘Currently, Nobles Crus does not have the necessary liquidity to honour these requests in the very short term.’
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They continue: ‘As we have always emphasised, the fine wine market is relatively liquid, however, in different proportions to those of the financial markets. We are well aware of the importance, in the current circumstances, to sell at market price and not too hastily sell in order to free up the necessary liquidity to honour these redemption requests.’
Nobles Crus shares were worth €180.25 as of 30 April 2013.
Last year valuations of fine wines by the Nobles Crus wine fund were questioned by the Financial Times and by French website LeVif/L’Express; Elite vigorously defended its valuation procedure.
A sale in February 2013 where €8.7m was achieved at the ‘valuation price of Nobles Crus portfolio’ is further evidence of the accuracy of their prices, Wilson and Tamisier say.
In a separate development, on 4 June the UK Financial Conduct Authority (FCA) banned the promotion of wine funds and other alternative investments to the ‘vast majority of retail investors in the UK’.
From 1 January 2014 these products will be limited to sophisticated investors and high net worth individuals.
Written by Jim Budd
Jim Budd moved from education to wine in 1988 and has written for Decanter since 1989. He is the former editor (1991-2015) of Circle Update, the newsletter of the Circle of Wine Writers. He writes the award-winning www.jimsloire.blogspot.com and is one of the five members of the Les 5 du Vin blog. Budd exposes the dangers of drinks investment on his award-winning www.investdrinks.org website, and complementary www.investdrinks-blog.blogspot.com blog. He also contributes to Hugh Johnson’s Pocket Wine Book, Wine Behind the Label and the Academie du Vin. Budd is a keen photographer – especially in the Loire.