Is Wine a Premier CRU Investment?

32 Pages Posted: 26 Aug 2011 Last revised: 1 Sep 2011

See all articles by Brian M. Lucey

Brian M. Lucey

Trinity Business School, Trinity College Dublin; University of Sydney Business School; University of Economics Ho Chi Minh City

Liam Devine

Trinity College (Dublin) - School of Business Studies

Date Written: August 26, 2011

Abstract

We investigate the case for Bordeaux and Rhone wine as an investment. The raw data analysed comprises of approx. 335,000 observations of wine sales prices and is analysed using the repeat sales regression method. General Red Bordeaux and Rhone wine indices are constructed for the period January 1996 - January 2007, which are compared with each other , with the Dow Jones Industrial Average (DJIA), and with a number of wine funds and finally with the the Liv-Ex Fine Wine 100 (FW100) Index. The findings suggest that Rhone and Bordeaux wines can provide average returns in excess of risk-free investments with lower risk at index level. Individual wines and sub-regions carry higher risk than the general indices with varying return levels and so direct investment in such wine by inexperienced, low volume or individual investors carries a high level of risk. Returns on indirect investment via wine funds vary, however all average returns of funds analysed exceed the general Rhone and Bordeaux Index in this research. Volatility for some wine funds was particularly high and may not suit risk-averse investors.

Keywords: wine, alternative investments, portfolios, assets, collectibles, inveting, diversification

JEL Classification: C29, G12, G11

Suggested Citation

Lucey, Brian M. and Devine, Liam, Is Wine a Premier CRU Investment? (August 26, 2011). Midwest Finance Association 2012 Annual Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1917216 or http://dx.doi.org/10.2139/ssrn.1917216

Brian M. Lucey (Contact Author)

Trinity Business School, Trinity College Dublin ( email )

The Sutherland Centre, Level 6, Arts Building
Dublin 2
Ireland
+353 1 608 1552 (Phone)
+353 1 679 9503 (Fax)

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia

University of Economics Ho Chi Minh City ( email )

59C Nguyen D├Čnh Chieu
6th Ward, District 3
Ho Chi Minh City, Ho Chi Minh 70000
Vietnam

Liam Devine

Trinity College (Dublin) - School of Business Studies ( email )

AAP College Green
Dublin 2
Ireland

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