Investing
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6 minutes
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Wine ETFs (What they are and how to invest in them)

By
Thomas M.
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September 14, 2020

Looking to invest in a wine ETF?

Investing in wine ETFs may be a good way to diversify your portfolio, giving you easy exposure to the lucrative wine market.

But how do you invest in wine ETFs?

And are they the best way to invest in wine?

To give you more clarity, we’ll give you everything you need to know about alcohol ETFs and how to invest in them. You’ll also learn about the three best ways to invest in wine.

This article contains:

(Click on the links below to jump to a specific section)

Let’s get started.

What are ETFs?

An ETF (Exchange-Traded Fund) is a security that tracks a basket of stocks, quite like mutual funds.

However, they differ from mutual funds in a few ways:

  • Unlike mutual funds, ETFs can be traded during the trading day.
  • ETFs are passively managed and track an index (e.g., Dow Jones Sustainability Eurozone Index or Nasdaq US Smart Food & Beverage Index). With no fund managers, they come with lower expense ratios than mutual funds.
  • ETFs are more tax-efficient than mutual funds.
  • They usually deliver no less than the benchmark index performance - unlike mutual funds which may or may not perform as well.

Can You Invest in Wine ETFs?

The fact is - there are no ETFs that are specific to wine.

What you can do instead is invest in ETFs, which include wine, like alcohol ETFs.

Here’s a look at what alcohol ETFs are:


What Are Alcohol ETFs?

Alcohol related ETFs are funds that have an “alcohol involvement”. Unlike socially responsible ETFs, their portfolio’s market cap is exposed to companies related to alcohol, such as producers, distributors, retailers, and licensors.

Here are a few ETFs where some of the holdings are alcohol stocks, including champagne, and wine and spirits stocks.

1. Fidelity MSCI Consumer Staples Index ETF (NYSE Ticker: FSTA)


  • 2019 performance:

Source: Yahoo Finance

  • Key holdings: P&G (14.83%), Constellation Brands (1.50%).
  • Expense ratio: 0.08%
  • PE Ratio: 25.16
  • 5-Year Return (relative to peer group ETFs): 30.53%

2. Vanguard Consumer Staples ETF (NYSE: VDC)


  • 2019 performance:

Source: Yahoo Finance

  • Key holdings: P&G (14.64%), Constellation Brands (1.58%).
  • Expense ratio: 0.12%
  • PE Ratio: 25.3
  • 5-Year Return: 30.10%

3. AdvisorShares Vice ETF (NYSE: ACT)

  • 2019 performance:

Source: Yahoo Finance

  • Key holdings: Boston Beer (5.12%), Craft Brew Alliance (3.72%).
  • Expense ratio: 0.99%
  • PE Ratio: 21.11
  • 5-Year Return: Not available.

4. iShares Global Consumer Staples ETF (NYSE: KXI)

  • 2019 performance:

Source: Yahoo Finance

  • Key holdings: Nestle (9.22%), Diageo (2.59%).
  • Expense ratio: 0.46%
  • PE Ratio: 23.38
  • 5-Year Return: 20.27%

5. Consumer Staples Select Sector SPDR Fund (NYSE: XLP)

  • 2019 performance:

Source: Yahoo Finance

  • Key holdings: P&G (15.95%), Constellation Brands (1.87%).
  • Expense ratio: 0.13%
  • PE Ratio: 20.86
  • 5-Year Return: 32.57%


While alcohol ETFs let you invest in the wine as an asset class, there’s no way to only invest in wine through them.


Luckily, there are a few alternative ways to better reap the benefits of the high-yield secondary market for wine.

The 3 Best Ways to Invest in Wine

You can uncork significant capital gains and dividend yield by investing in wine stocks, wine funds, and by buying and storing wine bottles through a wine investment advisor.

For a detailed guide about the different ways of investing in wine, check out this article.

1. Invest in Wine Stocks

You can track stock market data using resources like Bloomberg or hire a financial advisor to invest in stocks of the top publicly-traded wine companies.

Here are five of them, and their performance last year (2019):

PE Ratio

Stock Price Growth

Constellation Brands, Inc (NYSE: STZ)

44.73 TTM

10.08%

Diageo PLC (NYSE: DEO)

25.40 TTM

6.33%

Brown-Forman Corporation (NYSE: BF-B)

39.44 TTM

46.56%

Willamette Valley Vineyards, Inc. (NASDAQ: WVVI)

19.80 TTM

15.08%

LVMH Moet Hennessy Louis Vuitton SE (EPA: MC)

28.85 TTM

41.02%

For more details about these wine stocks, check out this article.

2. Wine Funds

Wine funds are similar to private equity funds and are frequently recommended by financial advisors.

Why?

They are managed by knowledgeable fund managers who can even identify and exploit arbitrage possibilities.

Here are a few examples:

1. Wine Source Fund

  • This fund lets you invest in a diversified portfolio of international fine wines and vineyards.
  • Managed by - WSF SICAV.
  • Annual Returns - 7%.

2. The Wine Investment Fund

  • It lets you invest specifically in Bordeaux wines that are stored in bonded warehouses, and sold at the right time.
  • Managed by - Anpero Capital.
  • Annual Returns - 7.1%.

3. Vini Sileo Vineyard Fund

  • This fund lets you own vineyards in France, Portugal, and Italy through fractional ownerships (several parties share and mitigate the risk of ownership).
  • Managed by - Vinito Capital Management.
  • Annual returns - 10%.

4. Sommelier Capital Advisors Hedge Fund

  • This is an actively managed global wine investment fund.
  • Managed by - Sommelier Capital Advisors.
  • Annual returns - Not available.

5. Watermark Fine Wine

  • This fund actively trades a portfolio of recent vintages of first-growth Bordeaux wines.
  • Managed by - Watermark Fine Wine.
  • Annual returns - Not available.


Remember that your investments in wine funds may be tied up for up to five years. And, a redemption request will take weeks to get processed.


Here’s another attractive option: buying bottles of investment-grade wines, storing them, and selling them later at wine auctions or “members only” wine stock exchanges like the London International Vintners Exchange (Liv-Ex).


You could buy premier crus and first growth wines from Bordeaux, Burgundy, Rhone Valley, or any other reputed wine region.


The best part is: you don’t have to do all this yourself - just hire a wine investment company like Vinovest.


Let’s see how you can do this.

3. Directly Invest In Wine Bottles With Vinovest


Vinovest is a wine investment company that lets you invest in sought-after wines that historically outperform the market.

How to invest with Vinovest.

You need to follow a simple five-step process:

  • Sign up on the Vinovest website to become a wine investor.
  • Complete a questionnaire to assess your risk tolerance and investment horizon.
  • Check your customized wine investment portfolio.
  • Fund your investor account.
  • Track your portfolio real-time.

Why Should you Use Vinovest?

Vinovest makes it easy to buy and manage wines. They research, authenticate, buy, store, and insure your wine for you.

  • Trusted Buying & Selling: Vinovest traces the provenance and checks the authenticity of each wine bottle.


  • Best Prices: They source wines directly from wineries, global wine exchanges, and merchants at the best possible wholesale prices.


  • Optimal Storage: The wine cases are stored in optimal conditions of humidity, temperature, air quality, light, and vibration with experienced storage providers.


  • Tax Advantages: With bonded warehouse facilities that charge no excise duty and VAT, Vinovest can pass on significant tax advantages to you.


  • Low Fees: Vinovest charges a 2.85% annual fee (2.5% for an investment portfolio of over $50,000). This fee includes handling wine buying, wine fraud detection, storage, insurance, portfolio management, and wine selling.


  • Full Insurance: Vinovest offers a full insurance policy at market value - almost like a Federal Deposit Insurance Corporation (FDIC) for your wines.


  • Easy Selling: You can sell your wine portfolio at any time to a counterparty buyer and get the wines delivered to them.

What are the Benefits of Investing Through Vinovest Over ETFs?

There are three key benefits of investing in wine through Vinovest vs. through ETFs:

  • It provides a solid hedge against market volatility (unlike real estate or stock markets). Consider this: wine has outperformed the S&P 500 index by 1,000% over the last 20 years, including during downturns.
  • You can invest solely in wine, rather than a mix of commodities which may or may not guarantee stable returns.
  • You get full ownership over the wines you invest in.

Conclusion

While investing in alcohol ETFs can help you invest in wines, they’re not an ideal option.

You’ll be better off using a trusted, online wine investment platform like Vinovest to select, buy, store, and sell your precious bottles instead of parking your money in alcohol ETFs.

Sign up today to invest in some of the finest, investment-grade wines to easily surpass all your financial goals!

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