Investors have often looked to stocks, bonds and property to increase their capital. But a growing number of high net-worth individuals are turning to the fine wine market to diversify their portfolio.
David Nathan-Maister, who has 20 years’ experience in the wine industry, said investors can expect a return of up to 15 per cent per annum with the Oracle Paradis Wine Fund.
The alternative investment fund — launched this year by the Oracle Capital Group — boasts fine wines, pre-1940 whiskies and cognacs, including the Cognac Clos de Griffier 1789.
The market dipped in 2009 but the demand for fine wine has now risen with new interest from investors in China, Russia and the United States.
Mr Nathan-Maister, director of the fund, says the specialised industry’s success lies in its scarcity.
“Rare wine is classic and special,” argues the former wine producer.
“It’s not like a handbag or brick and mortar. If the demand doubles there is no way of increasing the supply, so the price doubles.
“In investment, everything is uncertain, but specialist areas like fine wine have tremendous potential.”
The Oracle Paradis Wine Fund is not for average backers, as they are required to put down a minimum £100,000 investment. The fund currently has 12 investors on its books with over £3.1 million of funds under management.
Interested parties are advised to entrust five per cent of their investable funds in the group.
“This is only for high net-worth individuals who are looking to diversify their portfolio.
“They can also expect 15 per cent increases per annum,” Mr Nathan-Maister explains.
But he is suspicious of other wine investment funds, those he describes as having been set up “by former stockbrokers who turned their hobby into a business.
“That’s how a high percentage of wine funds are started. Stockbrokers have enjoyed wine over an expensive lunch and then launched a fund.
“That’s not us,” says Mr Nathan-Maister. “Our group is made up of people with a lot of expertise. We’ve also invested in the top tier of wines that are hundreds of years old.
“For us, it’s not about the price of the bottle, it’s about the type of wine.”
And rare wine is the Oracle Paradis Wine Fund’s speciality. Executives recently purchased — for more than £30,000 — the oldest surviving bottle of white wine from the Jura vineyards in France.
To celebrate the acquisition of the a 1781 Château Chalon, Oracle Paradis held a wine tasting in London, where guests sampled three Château Chalon vintages of the past 150 years (see review, right).
“Securing such a rare vintage, as well as the confidence of so many investors, is the best start we could have hoped for,” says a delighted Mr Nathan-Maister.
“It shows that, despite a turbulent market, a well-managed fund with distinct investments can be very successful.”
Of the wine tasting evening, Mr Nathan-Maister recalls: “We tasted the wonderful 1947 and 1929, as well as the fabled 1895.”
Read a review of the tasting by JC editor Stephen Pollard here