Currently the BRICs are seeking safe-havens in SWAG assets – shouldn’t you be doing the same? The fact is, as reported in the Money Section of The Times Newspaper on the 16th June titled “Millionaires and billionaires are ploughing increasing amounts of money into precious jewellery, art and fine wine as they grow more disenchanted with the returns from shares and cash deposits”.
The article is written by Mark Atherton who goes onto report a study undertaken by Barclays, which found that “ high net worth individuals now hold almost 10 per cent of their total wealth in such luxury assets”.
The big appeal of SWAG investments is the fact that they are tangible and have a “long life” i.e. they can be stored or appreciated for decades and in some cases are passed on through generations and generations. They all benefit from a ready market and from scarcity value, particularly with fine wine, which is consumed over time.
Why invest in SWAG right now? It has been proven consistently over time that the asset performance of SWAG does not correlate with those of stock markets and they are therefore recognized as being a useful investment when share prices are stagnant or falling.
So why choose fine wine rather than silver, art or gold? Firstly, of all the SWAG investments fine wine probably has the lowest entry point financially making it affordable to most with investments starting as low as £2,000. Currently delivering on average 12% per annum returns, wine outperforms equity based investments, delivering returns four times the current ISA offerings and average FTSE performance. Wines held over longer periods of time have delivered considerably more than that.
The Equity Gilt Study published by Barclays Capital recently tracks SWAG performance over the 60 year reign of Queen Elizabeth and reported fine wine as one of the best-performing alternative investments with £100 invested in 1952 being valued today at £468,000 tax-free. Exit is also easier in fine wine investments with a growing number of consumers, agents and methods for sale.
The fine wine market did undergo a correction during 2011, only the third in the last sixty years, when the Asian market broadened its focus beyond the Lafite brand. So now is a great time for investors with some superb vintages of the best Bordeaux wines available offering great value. This is especially the case with India on the verge of slashing tariffs on imported alcohol in return for an opening-up of the European market to India. Imported wines currently face a 150pc tariff in India as well as an “extra additional duty” of 4pc.
This is before any additional taxes are imposed by India’s individual states. These range from 30pc to more than 100pc and have made investing in wines relatively unattractive.
The new agreement could see duties slashed to just 40pc, boosting the sale of investment-grade wine.