Does the index reflect the market on Liv-Ex 100


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In the world of wine investing, Liv-Ex is like the New York Stock Exchange. Liv-Ex is short for the London International Vintners Exchange.  Based in the UK, this provides an international exchange for fine wines. It is an online marketplace where wines can be traded, similar to a stock exchange.

Not everyone can trade on the Liv-Ex. If you are a private citizen, you cannot just log onto the system and buy some wine. The market is limited to wine brokers, wine traders, and other wine professionals who are established in the industry.  These wine experts can use the Liv-Ex to buy and sell wines, placing bids and offers through the online system.

Another key point is that the Liv-Ex does not handle all of the different wines out there. The exchange is limited to the “blue chip” wines, those that are deemed investment grade. This means that most of the wines traded on the Liv-Ex are French wines from well known chateaux. This is where people can find highly rated vintages of the finest wines.

The Liv-Ex tracks price indices of certain wines, similar to the Dow Jones or S&P 500. Based on transactions made on their system, this has become a leading source for current and historical price data on fine wines, and a resource for determining price fluctuations and trends.  There are several different Liv-Ex indices, and the Liv-Ex 100 is the leading benchmark.  Calculated monthly, this tracks the prices of 100 of the top wines in the world.

2012 – A challenging year for fine wine investors

2012 was a challenging year for wine investors.  The Liv-Ex 100 showed a drop during the summer months. This was largely due to continuing economic issues in the Eurozone. Asian investors also seemed less interested than anticipated. However, James Miles, the Liv-Ex 100 director, noted that the index finished the year strongly. After the drop during the summer bid values on the Exchange amplified threefold, thus suggesting a confidence return.

Other reasons for confidence are that more investors are choosing physical assets that are immune from inflation. Gold is one, and wine is another. Wines from Bordeaux, Burgundy, Champagne and the Rhone were cited as potential good investments.

2013 prospects – unexpected drops according to Live-ex 100

Results on the Liv-Ex in 2013 were a bit disappointing, with a drop of 1.4% for the year. This marked an unprecedented three consecutive years of declines, but the trend seemed to be stabilizing.  After a 14.9% drop in 2011, there was an 8.9% drop in 2012, and only a 1.4% drop in 2013.  Prices are showing greater stability, and are positioned for resumed growth.

A notable finding was that the broader Liv-Ex Bordeaux 500 actually gained 0.8% over the year. This would tend to indicate that investors are seeking out other opportunities outside the top 100, looking for good value from secondary chateaux, and other regions. The top chateaux from Bordeaux appeared with high prices for their en primeur campaigns, and investors are now seeking lower priced opportunities. Burgundy, Champagne, and Italy have all performed well.

Another view is that wine prices had been inflated due to rapid expansion of the market in China. Now that the Chinese demand has eased off, the market is reaching a more balanced level. This could mean some real values out there for wine investors.

Does Liv-ex 100 reflect THE market?

Some people would say that it’s not 100% accurate. In spite of all assumptions, using the index is one of the safest ways of labeling a type of wine. Live-ex makes use of 5 indices, the 100 being the second. Live-ex 100 is the price movement of the first 100 most appreciated wines for which there’s a powerful secondary market (monthly calculated). As of 2011, the 100 index had been made of 95% red Bordeaux wine, 2% Champagne, 1.7% red Burgundy, 0.9% white Bordeaux, 0.3% Italian wine (red) and 0.1% Rhone wine (red).

Are the numbers accurate enough? Yes, they are. Future investors with enough capital to invest in fine wine should get to know the Liv-ex 100 index first. It’s a safe way to know the product and be sure that your investment will eventually bring you meaningful returns.


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