Case Study

Lafite Rothschild 1982 vs FTSE 100 - Case Study

The classic question for most investors when it comes to the fine wine market is whether or not the performance of wine will outweigh the likes of the FTSE 100 or the property market. It’s not exactly a secret that the property market will consistently perform over long period of time, however the question with the property market will always be regarding the liquidity and the way economic uncertainty can depress the market for sustained periods of time. One of the highlights when investing in fine wine is that along with the obvious tax advantages (exempt from CAGT & ​ VAT), the fine wine market has consistently performed throughout and some may argue perhaps better during times of economic uncertainty.

There is no better example of longevity in the fine wine market than the Lafite Rothschild 1982. If an investor had £5,000 to invest in either a Lafite Rothschild 1982 or £5,000 to invest in the FTSE 100 back in 1984 when the index first begun, then you would be looking at a huge gulf in class. As of today, the 18 cases of Lafite Rothschild (18 cases at a cost of £4,950) would be worth in the region of £777,000, whilst the investment in the FTSE 100 would be worth approximately £37,000.   A huge 15,609.09% growth over a 45 year period compared to a modest 652.88% from the FTSE 100. Now we’re not saying that every vintage has the capability of achieving such extraordinary returns, however with our experienced and knowledgeable portfolio managers working off the tasting notes and scoring system, where we would only recommend investing in wines which have a critic score of 95 or above, then as long as you are in a position to hold your investment for a minimum of five years then you are almost certain to see an unrivalled return.

Putting the Lafite Rothschild to the side, the fine wine market as a whole since 1988 has generated an annualised return of 12.1%. Not only has it shown steady returns it has also historically shown to be much less risky. Taking every five-year period since 1988, the fine wine market has shown a negative return in just one period with a loss of just 1.1%. Comparing this to the FTSE 100 that within the same period has seen over 72 negative periods, the worst of which being a loss of 39%. 

Looking at the results in more recent history, the Liv-ex investable wine index has risen by over 268% since the year 2000, compared to 30% from the FTSE 100 in the same period. All in all, you can begin to see why people are moving away from the more traditional investments and are looking to the well known ‘passion assets’ for a solution to the problem. 

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