How strong is fine wine as a diversification asset class?
On a 10-year historical data-set of equities, real Estate, bonds and commodities, a correlation analysis has been conducted on both a monthly and annual level. The Liv-100, the leading wine index, was used as the fine wine benchmark.
As the table above illustrates, correlation with equities is low on both an annual and monthly level. Within equities, although correlation is low, it appears that fine wine is more correlated with European equities than American equities.
Correlation with bonds is the highest among the different asset classes analysed, that is, according to Cru Wine Investment, due to inflation. Another positive characteristic of fine wine investment is its hedge vs. inflation.
Investing in fine wine with a professional organisation can offer durable diversification benefits and have a positive impact on the risk-adjusted return of a portfolio mixed with equities, bonds, real estate and commodities.