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Bordeaux at top of wine list for expert investors

NO FUSS For those who do not have the confidence to invest themselves, wine brokerages and investment funds help clients who want to enter the world of wine


Wine experts may disagree on most things, but one thing they all appear to agree on is that Bordeaux remains the best option when looking for a fine wine investment.

Anthony Hanson, senior consultant with Christie’s Wine Department, said Bordeaux over the years had proved to be fairly safe and dependable for anyone looking for an alternative place to put their money.

“However, I would put in a word for Burgundy because they have dry whites as well as wonderful reds,” he said.

Buying at auction or from a reputable merchant is just one way of starting your wine collection.

It is also advisable to go for wines rated by top critics and to ensure they are insured at replacement value and are stored in the best possible conditions. A bonded warehouse in or close to the country of origin will offer secure storage tax-free.

Greg De’eb, general manager of Crown Wine Cellars in Hong Kong, said he had seen a huge increase in collectors shipping back to Hong Kong since the former British colony abolished wine tax in the last budget last February.

“Hong Kong is the best world wine paradise at the moment. It is the only developed economy in the world with no tax and no VAT,” he said. “Worldwide collectors have now accepted that wines can travel around the world in refrigerated containers and it doesn’t affect their value.”

“What determines a lower or higher price is the condition of the bottle: Has the label been scratched, is it in its original case and where has it been stored?” he said.

But there are other options, for those who do not have the knowledge or confidence to make the purchases themselves such as wine investment funds and brokers.

Andrew della Cassa is director of The Wine Investment Fund, which for Hong Kong investors operates like a mutual fund based in Bermuda with a portfolio of Bordeaux wines.

The minimum investment over a five-year term is £10,000 (US$14,500) with a management fee for private investors of 1.5 percent per annum and a performance fee of 20 percent.

“Our first tranche was issued in 2003 and for every £100 the investors gave us, they got back £208.61. They’re very happy and we are very happy,” della Cassa said. “Most private clients invest every year. They put in £100,000 a year and at the end of five years take out £100,000 from the first year and reinvest what they have made and so create a nice little investment annuity.”

As a brokerage, Premium Liquid Assets Ltd buys the wines for investors, stores and insures them for three years and then sells them.

The investment limit is one case — 12 bottles — of wine, which at current values starts at around HK$60,000 (US$7,700) and their fee of 12 percent is paid on sale, senior portfolio manager Angelina Teh-leong said.

“It’s very simple,” she said. “We send the client a quarterly valuation. If they are comfortable with the appreciation, they can liquidate before the end of the three years, but we do not refund you any proportion of the storage or insurance.”

At the end of the day, there is always a risk involved. Jim Budd keeps a log on his Web site of wine investment disasters and companies involved in investigations. He also offers some sobering advice.

“If you do want to invest in wine, wait until you judge that the market has bottomed out, then buy,” he said. “The old adage still applies: Buy at [the] right time, at the right price with right provenance and from a reputable company and store the wine in your own name.”

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