The Surprising Ingredient That Can Help Boost Portfolio Returns While Lowering Risk
For many investors, a 60% stocks and 40% bonds portfolio is one of the most standard allocations.
But a minor allocation in wine can help investors do two things: Improve portfolio returns and lower overall risk.
Case study: Let’s see what happens if you added a 25% allocation in wine between 2018 and 2023 to a 60/40 portfolio:
1/ Returns rise from 5.4% to 6.2%.
2/ Portfolio risk falls from 4.5% to 3.2%.
Wine investing hits the mainstream
Fine wine has been one of the best-performing assets this past year — with a 12-month total return of 10.12%*.
Fine wine as an investment really took off in recent years as investors began to realize the benefits of investing in wine:
- Track record of consistent performance in various market conditions — outperforming the S&P 500 and Nasdaq at the start of COVID and during the Russia-Ukraine war.
- Low correlation to major stock markets — and can help protect against major downturns and provide greater portfolio diversification.
The bedrock of a fine wine portfolio
With stocks, big tech giants like Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) form the foundation of many portfolios — given their blue chip qualities and history of strong returns.
The big tech equivalent for wine is Bordeaux — the world’s largest and most liquid fine wine market. The Bordeaux region began producing wine in France nearly 2,000 years ago.
What makes the region so special?
- It has the perfect soil, climate and geography for producing wine with vast grape varieties.
- Expertise and techniques passed down from generations have led to the region’s consistent and high-quality wine.
These factors give it strong aging potential, making its wine highly sought after by global collectors.
Biggest annual wine event: Large buyers and critics travel to the region once a year to attend the Bordeaux En Primeur (EP).
- The latest vintage wines are tasted and purchased before being released to the public.
- Access to this event is important for investing in some of the world’s greatest wines at the best prices.
And luckily for investors, Cult Wines attends the event each year, purchases the highest potential wines and gives investors access to Bordeaux EP 2022.
Add some Bordeaux to your portfolio
Cult Wines is one of the largest global managers of wine investments — managing $360M+ for clients across 83 countries. They know a fine wine when they see one — and how to capitalize on it.
Their Bordeaux Smart Allocation is now open for investment until the end of June — giving investors access to a portfolio of new 2022 EP wines and attractively-priced vintages.
How does the Bordeaux Smart Allocation work?
1/ Investments tailored to your portfolio: Investors will receive allocations of the most attractive 2022 EP releases matched to their contribution and portfolio objectives.
2/ Actively managed: Investors benefit from Cult Wines’ team of portfolio managers and research analysts with a combined 100+ years of experience in fine wine and financial markets.
Cult Wines’ track record: Since its inception in 2009, Cult Wines has outperformed the major wine index Liv-ex 1000 with an 8.70%+ all-time compounded annual growth rate*.
- Source: Wine-Searcher, Investing.com as of 31 March 2023. Past performance does not guarantee future results.