Over the past decade there has been a noticeable shift in the focus of private investors. The rise of alternative assets in performance and popularity has been meteoric, with Fine Wine sat right at the centre. Combining profit and passion is an allure that thanks to technological access and transparency no longer requires hard to acquire relationships, just a trusted broker.
Stimulated by protracted market instability, conjoined with the continuing loss of societal trust in traditional money markets, a withdrawal and redistribution of capital away from core markets has become apparent. Private investors are increasingly seeking to diversify their holdings with the solidity gained from the intrinsic value of owning a physical asset.
This trend has seen “Passion Assets”, a subsection within alternative assets, achieve remarkable returns and become an ever more prevalent part of the modern-day investment portfolio. The luxury items that constitute Passion Assets, fine wine, art and classic cars to name but a few, do not generate a revenue stream.
Known as “Veblen goods’’, the market dynamics impacting passion assets differs from the norm.
Demand for these items increase parallel to their price, because of the perceived connotations of prestige and status. This creates a unique inverted demand curve which is one of the fundamentals behind wine investments success.
At BiBO, we believe that the financial traits of both the asset and the wider market more than match the passion that often drives the desire for ownership.
Consequently, we believe that this asset must be interpreted like any of the more traditional investment vehicles, within the context of its unique financial market.