Finding ways to take interests, hobbies, and collections to a whole new and profitable realm can be a feat to accomplish. Vinovest is one such way to do so for those who have an eye or a taste for wine.
Wine is an intriguing market to tap into but also arrives with the challenges of accessing the right wines and figuring out storage and custody solutions. Price transparency proved to be another issue, with wines being quoted at wildly different prices depending on which broker people seek out.
Founded in 2019, Vinovest comes from learning about fine wine serving as an asset class. With low correlation to the stock market, making it a strong hedge during market downturns, Vinovest hits many boxes when it comes to diversifying a portfolio, Vinovest handles everything from sourcing to liquidities to price transparency, as well as storage and custody. This all helps the investor have a full experience that’s as easy as trading stock.
ETF Trends spoke with co-founder Anthony Zhang, who notes the two currently live products. One is an index model designed to work for those less informed about wine, providing a general way of getting involved. The other model is intended for those who want to actively trade what is in their portfolio.
As far as the target audience, Zhang explains how many different kinds of investors are welcome. “We’ve had mostly retail investors, but quite a few of our individual consumers are money managers testing it out with their own capital,” Zhang states, adding how there’s plenty of potential for movement upstream in the future. That said, everything is currently accessible enough for anyone to sign up.
What Vinovest Can Offer
Lots of questions tend to come with those interested in what Vinovest can offer. This includes some basics, such as how the wine is selected, and where it is stored. Zhang is happy to note that the company has a network of global storage facilities used in tandem with many of the world’s largest wineries. This makes for a sustainable system, as it’s less about shipping and more about holding on in a safe location.
As Zhang states, “Our distributed storage model means that customers can buy and sell wines without physically having to ship them. This allows us to reduce hundreds of tons of CO2 emissions annually and we also have implemented a carbon offset program as well.”
Additionally, choosing the wines comes down to a selection algorithm, built on different risk-return factors, region, age of the wine, secondary pricing, previous and future vintages, and other aspects. With the help of three master sommeliers on the team, there’s plenty of reliable qualitative analysis going into this process. Another reasonable question from investors comes down to how liquid (no pun intended) can these wines assets be, which is again why having a variety of expert sources on hand can help in pushing things forward regarding information and future success.
In terms of the potential future growth of this space as an alternative investment class, Zhang notes how wine has essentially been sitting under everyone’s nose for decades. While many no wine gets better with age, most have not looked at it through a financial lense. Of note, wine has delivered 13.6% annualized returns over the past 15 years
“The fact that it’s outperformed the S&P 500 over the past two and a half decades really surprised me, and I think it will surprise a lot of other people. Especially now, given the turbulence of the market,” Zhang adds.
It comes down to how Vinovest has models set up for investors to easily access what they are offering, with a relatable product. And hopefully, that can mean wine, not to mention other alternatives like this, become more adopted.
Learn more about Vinovest and how it connects with ETFs here.
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