EXCLUSIVE: Cult Wines Tapping In To Asian Passion Investment

Passion Investing continues to gain ground and more serious attention from Asian investors. Vintage cars, art and the perennial favourite fine wine are all seeing strong growth across Asia.

In the recent Knight Frank Wealth Report the Fine Wine Icons Index was up 7% on the year, with strong growth predicted for certain vintages.

Cult Wines is the UK’s leading fine wine investment specialist, providing individuals who invest in the fine wine market with a fully managed portfolio service tailored to their objectives.

Founded in 2007 the company has grown to become one of the UK’s largest wine investment companies managing private client portfolios on behalf of over 1500 investors across 40 countries, with current assets under management of £25 million.

Following on from Dubai, Hong Kong, Shanghai and Taiwan meeting clients and intermediaries both current and prospective, Asian Wealth Times met with the director of London based wine investment manager Cult Wines as they prepared to meet with their Singapore and SE Asian based clients.

Cult Wines will be at the Shangri-La Hotel on Tuesday 26th May - details here:

Would you describe Cult Wines as an investment management firm or a wine specialist?

Both. We are an investment management firm that happens to specialise in wine as an asset class. We have wide-ranging experience in the team that cover many disciplines from investment banking to market leading wine knowledge. Specifically we have over 20 years experience in the wine industry, WSET qualifications and over 25 years investment banking experience. We label ourselves as a holistic fine wine investment and management firm and we take ownership of the whole process from selecting and sourcing the most suitable wines through to liquidation in order to achieve the specific targets of each client. So in essence to service our clients to the best of our abilities do need to be both a market leading investment manager and a world-class wine specialist.

When an Asian based investor builds a sizeable position in the fund what are the tax liabilities?

We don’t offer clients a fund structure rather the clients are built a bespoke portfolio of wines based on their risk appetite, capital investment, ideal investment terms, target returns and % of overall investor holdings. The clients are therefore the underlying owners of the asset. Wine investment put together in this manner is therefore unregulated, but it makes it more tax efficient as well as flexible in the ways it can be structured, i.e. wine assets can be held in an off-shore structures and for example for US investors it doesn’t fall within the current FATCA regulations.

Further to this, depending on the jurisdiction, gains from fine wine can be tax-free. For example in the UK and in Hong Kong profits are free from capital gains tax. Each region is different however, so we would always advise taking advice from a local tax expert.

Investors in an asset such as wine feel comforted that the asset is a real tangible commodity. Do you get many visits from clients to the warehouse and can you give any recent examples?

Very much so, clients own their own wines and that’s certainly part of the allure of the market – you are at liberty to do what you want with your asset. We had a client only a few weeks ago who flew in from Hong Kong on a Friday, viewed his wines on Saturday and flew back to Hong Kong on Sunday having met the team in a fleeting lunch time visit! Needless to say he was certainly satisfied with all facets of the service.

In a balanced portfolio would you expect to see more fine wine as a hedge?

Yes. We see fine wine as a very good way to compliment a diversified investment portfolio. Due to the fact that fine wine has a very low correlation to the financial markets, it is a good way for an individual to hedge against equities. Similarly those looking for a currency hedge, then fine wine can also be used to do this. We advise clients to consider an allocation to fine wine as a very effective way to further diversify their portfolios.

Liv-ex, (www.liv-ex.com), is an electronic trading platform for wine companies would you recommend potential and existing clients to utilise it?

Due to liv-ex being an anonymous bid/offer exchange for wine trading companies only, it isn’t accessible to private investors. However, by working with wine advisors such as Cult Wines who are members of the exchange, by proxy clients can benefit from the trading platform – in terms of having access to the market to buy/sell wine but also to use their available data, analysis and the most comprehensive independent wine valuations.

With the Asian market becoming a very important market globally does Wine Cult have any plans to open in the region?

London is still very much one of the most important centres in the world for fine wine, so our head office and main operation will always be based there. But with 1,500 active clients in over 40 countries worldwide including a significant proportion in Asia, it has therefore been a natural progression for us to open an office in both Mainland China and Hong Kong, which we hope to be operational by the end of 2015. This will allow us to help service existing clients in this part of the world as well as further expand our client base and offering.

Singapore would also be considered an important strategic location in which to service clients based here and in the neighboring regions such as Indonesia, Malaysia and Thailand – which we see as potential growth markets.




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