March Vini Catena: a simple way to invest in wine
Investing in wine is risky and can be difficult. So the new March Vini Catena fund that aims to simplify things is worth a look.
I was chatting recently to a friend who has received a £140,000 windfall and was asking advice on what to do with it.
I started by saying that my friend had three basic choices: stocks and shares, property, or cash. As soon as I’d said that, my friend’s wife immediately said: “But what about wine? I’d like to invest in a vineyard.”
I was pretty negative on that idea. Investing the whole windfall in just one vineyard would be very risky. All sorts of things could go wrong. What’s more, my friends know very little about wine.
Then my friend suggested they could invest just a portion of the windfall in some cases of wine or in an investment fund that buys and sells wine.
I wasn’t keen on those ideas either.
For starters, too many wine investment schemes seem to be run by dodgy operators. You should definitely steer clear of any wine investment that is promoted by sales staff who call you out of the blue.
And even when you look at more legitimate wine investment funds, there are question marks over whether some funds are accurately valuing the wine that they own. This issue was highlighted by the Financial Times last year.
What’s more, the Financial Conduct Authority (FCA) has decided to tighten the regulations on wine investment funds – largely due to the risks involved. From January next year, anyone who wants to invest in a wine fund will have to show that they are sophisticated, experienced investors or have a high ‘net worth’. In reality, that probably means an income of at least £100,000 a year or non-property assets worth at least £250,000.
Attraction
That said, I can understand why my friends are attracted to wine. They’ve already got a substantial amount of money invested in property, so they want to diversify from that. Now I’d argue that the stock market is the obvious way to do that, but I can’t deny that stock market returns since 2000 haven’t been exactly stellar (although the returns have been better than many people realise).
What’s more, consumption of wine across the globe is rising with especially fast growth in the US. American wine consumption has increased by more than 50% since 1997 – and that’s an increase in volume, not value.
So if you want to diversify away from property, and shares don’t appeal, I can see why you might be drawn to wine.
But if you’re not a sophisticated investor or high net worth individual, how can you actually do it?
New fund
Well, a wine fund has recently been launched in the UK that will still be available to all private investors when the rules change in January. The fund is called the March Vini Catena fund.
The fund isn’t going to be affected by the rule changes, because it doesn’t invest directly in wine. Instead it invests in companies that are linked to the wine industry in some way. So these companies might do any of the following:
- Own land or vineyards
- Sell or distribute wine
- Make or distribute equipment used in the wine industry
- Provide glass, cork or barrels
All companies held in the fund must be listed on a stock market somewhere in the world. The fund’s investments include Laurent Perrier (the fourth largest champage producer), Vina Concha y Toro (a Chilean wine producer), and global drinks giant Pernod Ricard.
The March Vini fund is operated by Banca March, a Spanish bank with an exceptionally strong balance sheet. The fund was launched in Spain in 2009, and the performance has been decent, delivering a 24% total return over the last three years, according to Citywire.
And now the fund has been launched in the UK….
If you want to invest, you’ll need to go via a financial adviser as the fund isn’t yet available on any of the consumer investment platforms such as Hargreaves Lansdown, Alliance Trust Savings or rplan.
What’s more, the charges are high – you’ll have to pay an annual management charge of 1.66% a year, which is higher than most investment funds. Indeed the cheapest stock market funds charge as little as 0.15% a year.
So should you invest?
Well, I’m still not convinced that wine is an essential part of any investment portfolio, but if you feel a strong urge to invest in wine, the March Vini Catena fund is probably your best bet.
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