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Portfolio > Portfolio Construction

Tapping Into the World of Wine Investing: Portfolio Fix

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The prices of top wines continue to increase. As of June 30, the Liv-ex Fine Wine 100 Index—representing the price movement of 100 of the most sought-after fine wines sold on a secondary market—is up 8.5% year-to-date and 19.7% for the past 12 months.

Wine funds offer an alternative to direct purchases and storage of collectible wines. These funds allow investors to tap professional wine-buyers’ expertise while avoiding the storage hassles.

Miriam Mascherin and Michel Tamisier—managing partners of Luxembourg-based Elite Advisers, which developed the Nobles Crus wine fund—described the ins and outs of this field in a recent interview.

When did you form Nobles Crus?

Nobles Crus was launched on 21st of November in 2007.

What’s the fund’s size and structure?

The fund size at the end of June 2011 is 43 million euros. The fund is structured like a classical SICAV, with the exception that it invests in tangible assets. It is audited by Deloitte our auditors once a year. (Note: A SICAV is an open-ended collective investment structure used in Western Europe, similar to an open-end fund in the U.S. The rough translation of SICAV is an investment company with variable capital.)

How is the fund regulated?

The fund is regulated by the appropriate Luxembourg authority.

Is there a minimum investment?

There are several ways to invest in the fund: either directly for an amount of 125,000 euros, via a management mandate, or through an insurance company. In these cases the investment can be as little as one share.

Are U.S. citizens allowed to invest in Nobles Crus?

Only through Delaware contracts or [certain] entities. Investors can also contact Elite Advisers for details.

What types of wine does the fund own?

Nobles Crus is an open-end Luxembourg specialised Investment Fund that invests in the finest vintage wines from Burgundy, Bordeaux, Italy and Spain e.g., such as Latour, Yquem and Romanée-Conti. All these wines are bought with the objective of reselling them for consumption once they have reached their apogée.

The portfolio consists of tangible assets selected in accordance with a bottom-up investment process that combines two strategies: growth investment (with 20% of the portfolio invested in en primeur wines) and value investment (with 70% invested in vintage wines). We have, for example, an 1811 Yquem in Nobles Crus’ cellar.

How do you select wines for the fund?

The management of the fund has been entrusted to Christian Roger, a permanent member of the Grand Jury Européen de Dégustation and recognised expert in both investment management and oenology. Accompanied by a team of experts, he carefully selects the precious nectars that make up the Nobles Crus portfolio (according to the following criteria: regions, producer, vintages, etc.).

The fund manager only selects the best crus and the best millesimes (harvest years). The investment process is structured and complies with self-imposed investment ratios. The fund is valued every month and always holds 10% cash in order to be able to meet redemption obligations.

How has the fund performed?

The fund now holds a three-year track record. Launched at 100 euros, the fund’s net asset value is now 154.58 euros. The YTD performance is +3.12%. Its value increased by 13.41% in 2010, 9.79% in 2009 and 20.39% in 2008.

What are the benefits of investing in wine through Nobles Crus?

For the more risk-averse investor, Nobles Crus can play a stimulating role in a portfolio invested in cash or money market products. Conversely, for investors with a greater appetite for risk, Nobles Crus can act as a “shock absorber” in a portfolio invested in, for example, emerging markets or commodities.

What reports do investors receive on the fund’s holdings and performance?

They receive a monthly report detailing the funds’ strategy, performances and introducing them to some exceptional wines. Once a year, they receive a complete annual report which discloses the entire portfolio, gives some indications on the wine market, the actors and the fund management team.

Are there any restrictions on investors’ ability to add or withdraw funds from their accounts?

The fund is valued on a monthly basis, there is no lock-up period and investors can redeem whenever they want to. However, we recommend that the investor remains invested for a period of three years.

What are the fund’s fees?

The entry and exit fee range from 0 to 4%, and those are given out to the advisers. The management fee is 2%, and there is a 20% over-performance fee with a 10% hurdle rate.

What sources of disclosure can U.S.-based advisors access to learn more about the fund? How can advisors get more information?

They just need to contact us; they can also subscribe to our newsletter to receive regular updates on the fund. In addition, they can register on the members’ area of our website.


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