London-headquartered Cult Wines is growing its Asian presence to meet increasing demand for investing in fine wine among local and regional-based clients.
The fine wine investment advisor has opened an office in Singapore, having established offices in Hong Kong and Shanghai in 2016 and 2017, respectively.
Sam Mudie has been appointed general manager of the new office and will be relocating from London, where he has spent six years as senior portfolio manager.
Cult Wines’ managing director Thomas Gearing told Citywire Asia that Singapore has long been a target for expansion, due to its already existing domestic market for investing in wines and geographical proximity to countries such as Thailand, Malaysia and Indonesia.
‘Singapore is our second office located in Asia, following the opening of our Hong Kong office in June 2016. Due to the success of that operation which mainly serves Hong Kong, Mainland China and Taiwan, we wanted to replicate the model in a region which we believe has huge potential,’ he said.
Managing about $161 million in assets, Cult Wines has over 1,700 clients across 70 countries. It provides fine wine investment advice, both on a discretionary and non-discretionary basis using algorithmically based models applied across historic and projected data.
Gearing said there is a lot of awareness that will be needed initially in the emerging wine buying countries such as Thailand, Indonesia, Malaysia, Philippines, where buying and investing in great wines is fairly new.
But given existing relationships and clients in the region, he believes there is great appetite for a product like this once people understand it.
‘Singapore [however] is different to the rest of Southeast Asia, in that the wine market here is well established.
‘A lot of the big European players already have a presence here, and culturally the social demographic in Singapore is more attuned to non-traditional investment opportunities such as these,’ he said.
Safe haven asset
Given the volatility we’re seeing in Asian equities, Gearing said now is a great time for investors to diversify away from traditional markets, to protect their portfolios and potentially hedge their overall risk.
‘Through our research conducted this year, we have proven that wine actually behaves as a more effective safe haven asset than Gold during periods of both economic deterioration, and economic growth,’ he explained.
The executive recommends investors to build a diversified portfolio of wines with a weighting roughly in line with the global traded secondary market for fine wine.
Bordeaux, for example, typically contributes to around 60-65% of the global market for fine wine, so typically most investment portfolios will have the highest proportion of holdings in Bordeaux, he said.
Burgundy, on the other hand, tends to attribute the second biggest proportion, he added. ‘From a returns perspective, it has produced the headline grabbing numbers consistently over the past 10 years.
‘It is a much smaller region than Bordeaux production-wise and therefore the best wines are often small production, hard to source and by proxy more expensive per bottle than their Bordeaux counterparts.
‘From a pure asset allocation perspective, Burgundy delivers superior returns, but is less liquid, with bigger spreads, and less efficiency,’ he concluded.