What’s the best way of investing in wine: via a syndicate or a private portfolio?
At WineFi, we offer two distinct solutions for investors looking to invest in this fascinating asset class.
For a long time, the only option for investing in fine wine was to build a private portfolio. In this model, you own the wine outright and can instruct delivery or sale at any time.
The downside is that this is an expensive and inefficient method of gaining exposure if you are only interested in wine as an asset class, as you have to buy the individual bottles outright yourself.
Another option is to invest through a wine investment syndicate.
With WineFi, that means you can invest in diversified, expertly-curated portfolios from as little as £3,000 — a fraction of the cost of building a fully diversified private portfolio.
In this article, we explore the pros and cons of both options.
Option 1: Wine Investment Syndicate
At WineFi, we run thematic investment syndicates to allow investment in a tax-efficient, diversified portfolio at a fraction of the cost of owning the underlying assets outright.
We will provide a ‘permitted investment’ list outlining the producers in scope, and a document containing a detailed breakdown of our analysis on the theme, along with estimated returns and portfolio scope.
Allocations are pro-rata to the total investment amount, so that if you invest £30,000 in a £300,000 portfolio, you are entitled to 10% of the exit returns.
Once allocations are closed, WineFi will opportunistically source based on our data analysis, Investment Committee’s recommendations, and spot offers we receive.
As with the private portfolio, WineFi will then arrange the storage of the portfolio at our purpose-built warehouse, Coterie Vaults – passing on the preferential storage rates that we receive to our investors.
We will field offers, and sell down the wines over the lifetime of the portfolio, meaning that investors will receive returns throughout the hold period.
Importantly,syndicate members maintain full day-to-day control over the assets via a voting system. This means that the syndicate can vote on all decisions related to the wines that they own, even if that is ousting WineFi as the portfolio operator!
The Benefits
- Lower minimum investment requirements.
- Increased diversification across multiple bottles and vintages.
- Use of WineFi’s data expertise and sourcing channels.
- Capital Gains Tax Exemption on returns for UK residents.
The Drawbacks
- Syndicate members cannot unilaterally withdraw wines from the syndicate.
Option 2: Private Portfolio
What is it?
In simple terms, when we refer to a private portfolio we are talking about a collection of wines that a single investor owns outright. If you are looking to invest a larger sum in wine, we will work with you to source, store, and exit a portfolio of this value.
We will work with you to select a portfolio in line with risk preference, horizon, and any specific regions, vintages, producers, or labels. We will use our supply-side expertise to identify and source wines at a discount to market where possible.
We will then arrange the storage of the portfolio at our purpose-built warehouse, Coterie Vaults – passing on the preferential storage rates that we receive to our investors.
The Benefits
- Complete control over acquisition and exit timing
- Greater control over portfolio composition
- Capital Gains Tax Exemption on returns
- Ability to withdraw specific bottles for personal consumption if desired
- Use of WineFi’s data expertise and sourcing channels
The Drawbacks
- Higher minimum investment threshold typically required
- Reduced diversification compared to syndicate structure
Conclusion
The choice between private portfolio ownership and syndicated investment largely depends on the investor’s objectives, resources, and level of desired involvement.
In both cases WineFi will arranges the storage and insurance of the portfolio at our purpose-built warehouse, Coterie Vaults, passing on the preferential storage rates that we receive to our investors.
For investors seeking to invest larger sums (£20,000+) and who already foster a love for wine, then the private portfolio allows your wine investment portfolio to reflect your interest as much as your drinking cellar does.
Investors approaching purely from an investment lens will gain considerable benefit from the additional diversification provided by our syndicate structure.
