Driven to drink no bad thing, for wine investors

Tue Feb 17, 2009 7:46am EST
 
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By Martin de Sa'Pinto

ZURICH (Reuters) - Financial turmoil may drive investors to drink but this could be a boon for some of them.

The Noble Crus fund, which invests in fine wines, had a vintage 2008. Launched in November 2007 and now managing 11 million euro ($13.9 million), the fund returned over 20 percent last year.

"Our portfolio is focused on the Burgundy region, and we like older wines whose valuations tend to remain stable. Market risk is quite remote for this kind of wine," said Michel Tamisier, owner of Elite Advisers which promotes the fund.

"France's other important wine region, Bordeaux, tends to produce more wine. It is more easily accessible, and so the financial crisis has had more of an impact on prices. Younger wines are also more sensitive to price fluctuations," he said.

A significant part of the fund is invested in older Bordeaux vintages, which have maintained their value or appreciated.

But in some cases, wine investing can bring on a hangover -- it was a much tougher year for the Vintage Wine Fund, which focuses on wines from Bordeaux.

Probably one of the world's largest wine funds with over 100 million euros under management, Vintage's value fell 33.4 percent last year.

The decline occurred entirely in the last third of the year, with much of it attributed to what the fund called "essentially foreign exchange related reasons." The fund, which reports net asset value in euros, was hit hard by sterling's sharp year-end decline.   Continued...