Knight Frank teams up with Wine Owners to create fine wine index
Global property consultancy Knight Frank has teamed up with portfolio management platform Wine Owners to launch the Fine Wine Icons Index.
The new index ties in with the property firm’s annual luxury investment index which maps trends in “passion-led, tangible assets”.
Nick Martin, founder of Wine Owners, told Harpers.co.uk the partnership came about “as a result of understanding we shared a high net worth audience passionate about certain treasure assets - of which wine is the world’s most popular and widely held”.
The index uses pricing derived from raw data principally sourced directly from Wine-Searcher, which Martin says “gives us a vast, homogenous, data set of tens of millions data points to feed into our pricing algorithms, and which encompass our trading data”.
The index also includes pricing information on rare, hard-to-find wines, with Martin saying the firm’s pricing algorithms take into account that there are less data points available. But, he says, the purpose of the index is to “reflect a more diverse set of collectible wines, and that inevitably leads us into less frequently traded territory”.
Martin says the index is not intended to rival the well-established Liv-ex main index, rather its Wine Owners 150 is intended for that.
The index is up 13% since the market peaked in mid-2011, in contrast to a number of its competitors. Martin said this is because the index is less “Bordeaux-heavy”. “Bordeaux has performed in an uncorrelated way with fine wines from almost all other regions of production”.
“This is of course down to the discontinuity caused by the China Effect, and since the Bordeaux bubble burst in July 2011 it’s been a long slow decline. But during the same period other markets such as Burgundy, Northern Italy, Champagne and California (inter alia) have performed strongly (see below). So any index that is less ‘Bordeaux-heavy’ will substantially outperform any index that reflects the traditional highly predominant role that Bordeaux (as the world’s largest single region of fine wine production) has played in mainstream indices and typical wine fund compositions.”
The index displays a total growth of 230% over the last 10 years, and states that “only classic cars have performed better”. But wine’s performance has been less impressive in the last year, rising a modest 3% in the 12 months to June 2014.