A case for fine wine: a safe Brexit bet

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Fine Wine. The asset you’re conditioned to ignore.
December 31, 2018
Why do individual investors often ignore lucrative assets and opportunities?
December 31, 2018

A case for fine wine: a safe Brexit bet

It’s been over two years since the U.K. officially announced its exit from the European union.

And with six months to go before next year’s March 29 deadline, things seem to be going from bad to worse for U.K. investors.

In June 2016, the days following the U.K.’s leave vote saw the pound fall nearly 10 percent against the US dollar, while the FTSE 100 index shed nearly 4 per cent.

As the deadline loomed closer, October 2o18 saw the FTSE in a shock drop driven by Brexit uncertainty,  shedding around 96 points to close at 19,549.

As the prospect of a no-deal Brexit, or a second referendum becomes ever more likely. U.K. financial markets continue to react with volatility, with U.K. investors increasingly (and rightly) concerned about protecting their portfolios.

It’s clear that with Brexit uncertainty, stock markets and traditional assets are no longer a secure or lucrative option for investors.

The Bank of England predicts that in the case of a no-deal Brexit, the U.K.is on course for another recession, one with far worse consequences than the 2008-2010 crisis.

That’s really bad news for U.K. investors.

During the last financial crisis, the all FTSE Shares lost about 25% and gold futures – traditionally a safe haven – fell nearly 5%.

However, for savvy investors investors, Brexit isn’t a threat – it’s an opportunity.

By diversifying their portfolio with assets that are uncorrelated to financial markets, investors in alternatives such as fine wine stand to secure low-risk and tax-free capital gains – despite market uncertainty and the predicted, prolonged economic downturn.

Assets such as fine wines are not subject to the same market forces as traditional investments. Instead, it is their intrinsic value and rarity that keeps their value highly appreciated,

In fact, despite global recessions, political turmoil and stock market suffering, vintage fine wines have experienced no significant drops in the last 40 years.

They’ve also consistently outperformed stock markets and returns on traditional assets – including during the 2008-2010 financial crisis.

Now, while the FTSE continues to fluctuate on Brexit uncertainty, fine wines have continued to rise in value, up 20%  in 2017 and continuing this growth in 2018.

For savvy investors who diversify their portfolio with fine wines and other alternatives, Brexit represents an opportunity to hedge against market uncertainty while simultaneously capitalizing on the weakened pound.

Move fast. Act now. And be one of the few that comes out the other side better off.

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