PROS
Low stock market correlation
Open to all investors
$1,000 minimum investment
CONS
Short track record
Illiquid portfolio
Vinovest is democratizing wine investing by offering individuals the ability to invest in fine wine bottles with no minimum investment amount.
At A Glance:
| Minimum Investment | None for trading accounts |
| Professionally Managed Account Minimum | $1,000 |
| Types of Plans | 4 professionally managed plans |
| Fees | 2.25%-2.85%, depending on the plan |
| Liquidation Fee | 3% if you withdraw within 3 years |
| Types of Accounts | Individual only |
| Trading Account | Yes. Buy and Sell Same Day |
| Insured? | Insured with the ‘FDIC equivalent’ of wine |
| Selling Costs? | No cost to sell your wine |
| PROS | CONS |
|---|---|
| Low stock market correlation | Short track record |
| Open to all types of investors | Illiquid portfolio |
| Low minimum investment ($1,000) | High fees (2.85%) for a starter portfolio |
| Your portfolio is fully managed (storage, authentication, security) | Limited information on how the portfolio is constructed |
Who Should Use Vinovest?
Vinovest is good for…
Those interested in investing in alternative assets with an investment horizon of 10 years or longer.
Vinovest is not good for…
Individuals looking for immediate returns who are not comfortable locking up their money for extended periods.
What is Vinovest?
Founded in 2020, Vinovest is an alternative investment platform that provides access to everyday investors like you and me the ability to invest in rare wine.
Due to the high operational costs, lack of transparency, and low volume, this asset class was once only available to the ultra-wealthy, but Vinovest aims to change that by offering portfolios starting at just $1,000.00
The company’s co-founder and CEO is Anthony Zhang, a repeat entrepreneur. He founded and sold two companies before starting Vinovest.
Why Invest In Wine?
- Performance: According to Vinovest, wine outperformed the S&P 500 by 1000% over the last 20 years.
- Uncorrelated Returns. Compared to the S&P 500, wine has uncorrelated returns to the S&P 500. In other words, if the S&P 500 is going down in value, that could very well mean your Vinovest portfolio value is going up. So investing in fine wine is an excellent way to diversify your investment portfolio.
- Inflation Resistant. Inflation can make your groceries, gas, and rent more expensive. However, it has little effect on fine wine, making it the perfect antidote to rising prices.
- Tax Advantages. Vinovest warehouses don’t charge an excise duty or a value-added tax (VAT). This allows Vinovest to pass significant tax advantages to its investors.
- Direct Ownership. At Vinovest, you own 100% of every wine in your portfolio. You can buy, sell, or drink at your choosing.
Performance: According to Vinovest, wine has outperformed the S&P 500 by 1,000% over the last 20 years.
The benchmark for fine wine is the Liv-ex 100 index, which tracks the price performance of the 100 most sought-after fine wines on the secondary market.
Vinovest has yet to release any returns on individual portfolio returns. They have only cited the Liv-ex 100 index as a proxy. However, I’d like to see more information on historic portfolio returns.
How & When Do I Earn Returns On My Investment?
3 factors mainly affect wine prices. Maturity, Scarcity, and Brand Equity.
As with any investment strategy, you should have a long-term investment horizon when investing with Vinovest. Profits are earned when your wine has increased value above your purchase price.
Maturity
Investment grade wines take 10-15 years to mature, in general. For example, a 12-year-old bottle of Bordeaux will generally be more valuable than a 2-year-old bottle. Just like a wine you see at a spirits store, the older the bottle, the generally more expensive it is.
Scarcity
Once a vintage is bottled, that’s the end of the supply. Zip. Zilch. So, as time passes and the vintage gets consumed, the remaining bottles become more challenging to locate. Therefore, demand increases, so the price of that vintage will increase in value.
Brand Equity
Like a Louis Vuitton bag, established wine brands fetch an above-market price. Wines made in the Bordeaux region, Burgundy, Rhone Valley, and Tuscany in Italy tend to increase in value over time.
Vinovest works with investors to identify the best time to sell their wines to maximize returns.
Couldn’t I Just Buy The Wine Retail & Hold It?
Vinovest works with wholesalers to procure wine at below-retail prices. Furthermore, when you invest through Vinovest, the company handles authenticating, insuring, and storing your wine.
This leaves you with more free time to do things you enjoy.
Vinovest Exchange
Vinovest recently launched its exchange platform. Until recently, the wine portfolios were selected by an algorithm and a collection of sommeliers (except Premium and Grand Gru portfolios).
Now, when you open an account through its trading platform, you can invest in wine as you invest in stocks. There is no minimum balance or hold time required. You have complete control.
A Vinovest trading account is best suited for individuals who have considerable knowledge of investment-grade wine.
Key Differences between Vinovest Trading Account & Managed Account
| Feature | Trading Account | Managed Account |
|---|---|---|
| Minimum Investment? | No | Yes, $1,000 |
| Buy Individual Bottles? | Yes | No, only by the case |
| Lock-up period? | No | No |
| Same day trading? | Yes | No |
What Types of Portfolios Does Vinovest Offer?
Vinovest offers 4 types of portfolios, the ‘Starter,’ ‘Plus,’ ‘Premium,’ ‘Grand Cru.’
Each portfolio has a different investment minimum with a sliding fee scale and different features.
Starter
The Starter portfolio requires a $1,000 minimum balance and has a 2.85% annual fee. This beginner package has an algorithmically selected wine portfolio, 100% guaranteed authenticity, and excellent condition wine. Furthermore, all your wine is fully insured, and you have access to a network of world-class wine storage facilities.
And, as a bonus, you have the option to invest in a carbon offset program.
Plus (Most Popular)
The Plus portfolio has a $10,000 minimum balance and a 2.70% annual fee. This 2nd tier portfolio comes with all the benefits of the Starter portfolio, plus access to bi-annual reviews by portfolio managers and access to rare wines not available in the starter package.
Premium
The premium portfolio has a minimum balance of $50,000 and a 2.50% annual fee. In addition to all the benefits of the Plus portfolio, the Premium portfolio also includes:
- Access to wine futures (yes, as in like commodities futures)
- Customized portfolio construction, in addition to Vinovest’s algorithmic portfolio selection.
- Access to rare, auction only wines
- Exclusive access to Vinovest wine tastings and events.
Grand Cru
The Grand Cru portfolio is Vinovest’s most exclusive portfolio. This portfolio requires a minimum of $250,000 and has a 2.25% annual fee. In addition to the benefits of the Premium tier, the Grand Cru portfolio also includes:
- Access to the Vinovest Council. This council includes: (fifth generation winemakers to beverage directors at three Michelin star restaurants to world-renowned sommeliers).
- Personalized quarterly portfolio insights
- Preferred access to the rarest, most exclusive portfolios
NOTE ABOUT FEES: The annual fees across all the portfolios covers insurance, wine storage, authentication, and active management of your portfolio. Fees are prorated across the year and only charged on the invested capital in your account.
How Does Vinovest Determine Which Wine To Include In Its Portfolios?
Like any investment, it takes a true expert to pick an investment-worthy wine. Vinovest has a team of world-class sommeliers to determine which wines will increase in value over time.
Wine Investment Criteria Includes:
- Critic scores
- Current age
- Liquidity
- Producer’s brand equity
- Risk-to-return ratio
- Secondary market pricing
- Strength of region
How Does Vinovest Value My Wine?
Vinovests values wine at the lowest average of all asking prices for each specific vintage over the last 24 hours.
As with most alternative investments, liquidity is limited, and valuations are more complex than equity investments.
With that, Vinovest uses millions of data points from private and public markets to estimate the value of your bottle of wine.
What Happens If I Want To Sell My Portfolio?
While most investors who invest in wine do so purely for financial gain, Should you please, you do have the ability to drink your investment if you choose. A truly liquid investment!
I digress…
Vinovest works with a vast network of wine traders and merchants. In general, you can sell your wine in 2-3 weeks.
Is Vinovest Legit?
Yes, Vinovest is legit! Vinovest works directly with wineries to ensure authenticity. Furthermore, the company holds a third-party insurance policy that guarantees the wine is 100% authentic.
Since the company is not selling securities or shares – they are not a registered investment company like the real estate crowdfunding platform Groundfloor.
Alternatives To Vinovest
Alternative assets outside traditional stock market investments are becoming more popular and increasingly open to everyday investors like you and me. While passion assets struggle with liquidity and valuations, it’s still something to consider if you find stocks and ETFs boring.
Cult Wines
The biggest and oldest player in wine investing is London-based Cult Wines which has been around since 2007 and has $320 million in wine assets.
The company traditionally focused on European markets and only recently started focusing on American markets. However, Cult Wine has a minimum investment of $10,000 for its lowest investment tier with fees starting at 2.95%. Like Vinovest, Cult Wine investors also own the bottles of wine they invest in.
Vint
Vint was founded in 2019 and currently has $1.25 million invested on its platform. Unlike Vinovest and Cult Wines, you are buying shares that start at less than $100 with a minimum investment of just one share.
The shares in LLC have ownership of the bottles. Accredited and non-accredited investors are able to invest with Vint. Vint charges a sourcing fee with each offering but does not disclose the amount of the fee.
The Bottom Line
Vinovest offers a unique business model appealing to a younger generation of investors interested in investing in an asset class outside of traditional stock market investments, historically known as ‘passion assets.’ While the company does not have a long-term investing record, they have simplified the fine wine market to make wine investments available to individuals like you and me.
Like any alternative asset, I certainly wouldn’t liquidate my 401K and invest it all in fine wine. Still, it could be a good way to add non-correlated assets to your investment portfolio.
