Portfolio Confidential
Like many Canadians, I am doing my best to boycott U.S. products given current tense relations. I would also like to diversify my investments outside of the U.S., and I wonder what my global alternatives are for investments in fine wine.
Last year I had the opportunity to interview Callum Woodcock, the founder of WineFi for a commissioned research paper on the topic of “Women & Alts: A Global Perspective”. I thought he would be the perfect person to comment on alternatives for investments in fine wine. His response:
The good news is you have plenty of options to choose from! Whilst the popularity of Napa Valley wines as investments has risen considerably in recent years, California is far from the only “investment-grade” wine region. At WineFi, we consider six other regions as producing wines likely to appreciate. These are Bordeaux, Burgundy, Champagne and the Rhône in France, and Tuscany and Piedmont in Italy.
For many years, Bordeaux was considered the premier wine investment region, but an oversupply of high-quality vintages, and significant mispricing by Bordelais producers has led to a stagnant market since 2011—with wines returning just 4% per annum, on average. Burgundy and Champagne stand out as two regions that have experienced tremendous growth over the past decade. Fine wine from Burgundy is often produced in vanishingly small quantities, leading to competition amongst consumers and investors alike for access to the most sought-after producers—think Domaine de la Romanée-Conti with 500 cases in a vintage, for example! Equally, Champagne is unique, in that it is closely linked to celebration in the minds of consumers. It is difficult to imagine going from drinking Krug, Dom Perignon or Salon to prosecco or cava...
For investors looking to capitalise on new trends, the so-called "Barolo Boom" in Piedmont is attracting significant interest from investors and speculators alike. This has meant that Piedmont, more than any other region, has weathered the recent downturn in the markets.
If this is intriguing to readers, check out the WineFi platform [https://www.winefi.co/]. As always, I am not endorsing any particular investments but simply providing interesting options for your consideration. WineFi offers a data-driven approach to fine wine investment, combining market-leading quantitative analysis with the multi-decade expertise of their veteran investment committee to select, source and manage portfolios of fine wine. Backed by Coterie Holdings, one of the most prestigious fine wine groups, WineFi offers solutions to invest in wine from as little as £3,000 ($5,500 CAD).
It is not necessary to be an accredited investor to invest via this platform—fine wine is not a regulated asset class, and neither is WineFi’s syndicate structure.
What are your top three favourite investments and why?
My top three favourite investments are private equity, non-primary residence real estate and exchange-traded funds (ETFs). I like private equity for the opportunity to make higher returns! A 2024 study by the Chartered Alternative Investment Analyst Association (CAIA) found private equity returns were 4.8% per year higher than public market returns between 2000 and 20231.
During the pandemic, my husband and I invested in a small apartment in northern Provence. We are avid hikers and have been renting houses in the area every summer for the last decade or so. Buying a place allowed us to mix investing with personal enjoyment. Plus, given how much we’re saving on summer rentals, it will be fully covered by 2030!
ETFs are the mainstay of my portfolio for a couple of reasons. First, I like the low-fee passive way to participate in market returns, and I also like having fast and easy access to specialty sectors quickly, such as wine, art, or high tech.
In the January edition of Canadian MoneySaver, someone asked you “Are there any undiscovered ways to invest in generative AI?” and your short answer was basically “No…the markets are efficient and pretty much everything that would benefit from generative AI tailwinds is already up a lot.” What about the recent Trump tariffs and so on…is that perfectly priced into stock prices, or are there still some interesting angles?
I think there may be some possible market inefficiencies, and therefore an opportunity to invest and make money. I spend a lot of time on the road, not just in North America but in Asia, Europe, and the Middle East. And I notice that the U.S. stock market is generally reacting only to the first-order impact of tariffs. When it looks like the Trump Administration is going to apply the tariffs, investors are discounting (or applying a risk premium) the direct impact of those tariffs, and possible direct impacts on specific sectors, interest rates, the U.S. dollar, and the possibility of economic weakness or even a global recession. Then, when President Trump cancels or postpones the tariffs, they remove that discount or risk premium, and everything goes back up to where it started, more or less.
But it seems to me that investors are not, or at least not yet, thinking about more permanent or second-order effects. Many describe tariffs as a form of economic warfare, and it seems likely to me that non-U.S. consumers, businesses and governments will start doing the opposite of a “buy American” policy. They feel like the U.S. has declared war on them, at some level. Most people know that (for example) Europeans are deliberately not buying Teslas…but what if that spread? Avoid Starbucks; buy from local coffee shops. What if Europe decides to build its data centres and its cloud computing infrastructure? Asian countries are already spending billions doing exactly that. I don’t expect the big U.S. tech companies will see their revenues collapse, but if they even slow a few percentages, I don’t think the market has priced that in.
Only about half of Americans have passports. Many tend to think the world ends at their borders. And I speculate (but could be wrong) that they are failing to appreciate how much the rest of the world has fundamentally lost trust in the U.S. That trust could be rebuilt over time, but that will take years, not months. And in the meantime, U.S. companies may be facing more of a headwind than U.S. investors are thinking.
1 https://caia.org/blog/2024/04/23/long-term-private-equity-performance-2000-2023#:~:text=Private%20asset%20classes%2C%20including%20private,return%20across%20private%20asset%20classes.