Collectibles

Investment grade wine – Asset class analysis and fund performance

The state of the fine wine market

2011 proved to be a difficult year for wine investors. After reaching a new all-time high in June 2011, the Liv-Ex Fine Wine 100 Index, which tracks price movements of 100 most sought-after fine wines, experienced a draw down of over 21% towards the end of the year; a decline in prices last seen during the financial crisis.

As suggested in a previous issue of A SQUARE, the prices of fine wines reacted highly sensitive to cooling emerging economies. Empirical research shows a strong correlation between the number of billionaires, specifically in BRIC countries, and wine prices

Long-term asset class analysis

U.S.-based wine investment firm Trellis Fine Wine Investments LLC provides additional data explaining the long-term properties (July 2001 to December 2010) of investment grade wine. Trellis compares the Liv-Ex 100 to other asset classes:

• Performance: The Liv-Ex 100 returned an annualized 11.33%, third highest among all major non-fixed income asset classes. Only gold’s 18.28% annualized return and the Dow Jones-UBS Commodities Index’ 12.89% annualized return have outperformed investment grade wine on an absolute basis.

• Volatility: Only the 5.73% standard deviation of the Dow Jones-Credit Suisse Hedge Fund Index is lower than the 10.57% standard deviation of the Liv-Ex 100 Index for this period.

• Sharpe Ratio: In terms of risk-adjusted returns, fine wine performed second best (1.07), again only inferior to the Dow Jones-Credit Suisse Hedge Fund Index (1.11).

• Correlations: The Liv-Ex 100 Index had a correlation of 0.34 with the S&P 500 Index and a correlation of 0.13 and 0.26 with gold and the Dow Jones – UBS Commodities Index, respectively. This suggests that fine wine might help investors to protect their portfolio against events affecting equity and commodity markets.

For Full Article:
http://www.opalesque.com/index.php?formsearchorder=pub_date&p_and=SearchAdvanced&and=show_atomic&no=6656&act=archiveA2

Diamond investment special part III

Investing in precious stones, pearls and jewelry

In parts I and II of our diamond investment special, we analyzed the diamond industry’s supply chain and an opportunity to invest in it through managed accounts. This issue focuses on the collectible side of the diamond market.

Passion investment specialist Elite Advisers recently launched Divine Jewels, a fund investing in diamonds, other precious stones and pearls as well as vintage jewelry. Opalesque spoke with Miriam Mascherin, Managing Partner of Elite Advisers about the fund’s investment strategy and the market.

For full access to the interview:

http://www.opalesque.com/index.php?formsearchorder=pub_date&p_and=SearchAdvanced&and=show_atomic&no=6652&act=archiveA2