Is Vinovest a viable way to diversify your investment portfolio?

By   |   Verified by Andrew Boyd   |   Updated 9th June 2021

Vinovest Review
  • Diversify your portfolio by investing in fine wines with as little as $1,000.
  • Access investment grade, globally diversified wines at below retail prices.
  • House your authenticated wine in safe, temperature-controlled cellars.

While stocks, mutual funds, and ETFs offer you a great way to grow your wealth, there are alternative assets that you should consider for your portfolio. Vinovest gives investors a unique model where they can invest in fine wines.

Like investing in art or heritage automobiles, fine wines are in high demand as investment assets. While it's a more obscure market than traditional vehicles like stocks, it presents a viable way to grow your money.

What is Vinovest?

Founded by Brent Akamine and Anthony Zhang, Vinovest provides investment opportunities in fine wines. The company has partnerships with several established, world-famous wineries, producing some of the most sought-after wines in the world.

Fine wine investing at Vinovest involves investing in wine stocks or buying bottles of wine that may appreciate over time. Vinovest selects investment grade, globally diversified wines, buying proven vintages and emerging contenders below retail. Vinovest will store and secure your wine in bonded warehouses strategically located near fine wine regions (one of which is also used by the British royal family) until you are ready to sell them or take delivery.

The Vinovest team consists of tech entrepreneurs, wine lovers, and data scientists recommending the best wine options to match your wine palate and investment needs. Vinovest operates as a full-service investment, bringing you the product and storage facilities.

Where is it available?

Vinovest is available internationally for anyone interested in participating in investments in the wine market. The only requirement for being a member of the investment group is that all members must be of legal drinking age.

Who is it designed for?

If you're a wine aficionado and art collector, or you enjoy parking your money in classic cars, Vinovest is another option to add to your investment portfolio. Fine wines don't have any correlation with the stock market, making them the ideal investment piece to diversify your portfolio against market shocks.

Since the mid-1980s, fine wines have averaged a return of 11.6%. While that might not beat the return offered by the stock market, it's steady, secure growth and a great way to park your wealth in a productive, in-demand asset class.

With Vinovest, you choose from a range of winery brands, wine blends, and characteristics, pairing them with your investment requirements, such as your exit horizon and risk tolerance. Vinovest works with accredited and non-accredited investors, meaning anyone can join the platform and start investing in fine wines.

Vinovest is for the discerning investor that already has a significant stake in other investments. Handing your life savings over to invest in fine wine is a mistake. However, diversifying up to 5% of your net worth into assets like fine wines, artwork, and other collectibles gives you a safety net if your other investments stop performing or experience catastrophic losses.

Who would not be a good fit for Vinovest?

Investors that need access to liquid investments (pardon the pun), should avoid parking their money in fine wines. It's a notoriously "illiquid" investment, sort of like real estate. If you put your wine collection up for sale, it may take years to find the right buyer.

If you're looking for investments that bring you cash flow, Vinovest is not for you. While you get a steady growth in your wine collection, it's not going to give you passive income as a rental property would.

Also, some wine investments perform better than others. Since you're going to be selling the wine in the future, you'll need Vinovest to broker the deal, and the chances of your wine selling at market value are slim.

How does it work?

Starting with Vinovest is easy. The company offers you three investment tiers.

The Standard tier requires a minimum $1,000 investment into a standard offering, the Premium option requires a $50,000 investment into a custom wine collection portfolio, and the Grand Cru option requires a minimum investment of $250,000.

Sign up through the official company website, taking a quiz to assess your risk tolerance and investment criteria. After you finish your quiz, you have the option of browsing through the wine collection, choosing the bottles you want to add to your portfolio. Vinovest offers you a full-service storage facility with temperature-controlled cellars to house your wine in optimal storage conditions.

At any time, you can request the delivery of your wine for self-storage or enjoy with friends or family. Vinovest gives you an online portal where you can monitor the health and growth of your wine portfolio. If you plan to flip the wine in the future, you can set your investment horizon and cash out when you want to make an exit and realize your profits.

Vinovest claims its team and its proprietary algorithm constantly searches for the best wines from wineries around the world, including Burgundy, Bordeaux, Napa, and up-and-coming wineries around the globe.

As an example of what's possible with investing in Vinovest’s offering, the Sassicaia 2015 is up 55% in a single year. The Armand Rousseau Chambertin Grand Cru 2013 increased a staggering 114% in a single year.

Fees

Vinovest charges its investors a 2.85% annual fee on Standard portfolios, reduced to 2.5% for all portfolios over $50,000 in value, and decreasing further to 2.25% on portfolios over $250,000. As an example, a $5,000 Standard portfolio would incur a $142.50 annual management fee.

Compared to passive investments such as ETFs and mutual funds, the fees are significantly higher. However, this fee structure is in line with managed investments.

Fees include storing your wine collection in the Vinovest cellars and the cost of logistics involved with shipping wines around the world.

How to sign up

You can sign up for Vinovest on the company's official website. It's a simple signup process, with your account registered and ready to make purchases in a few minutes. There's no complicated paperwork, and you get a hassle-free process for making your purchases and investments.

Pros & cons

Pros

  • A great way to diversify your portfolio into collectibles.
  • Price action does not correlate with the stock market.
  • Higher tiers receive investment recommendations by personal wine experts.
  • Access to wine futures, for wine that is still in the barrel.
  • Secure, established storage cellars.
  • Insured storage and guarantees on the authenticity of your wines.
  • Available to non-accredited investors.

Cons

  • High management fees eat into potential profits.
  • Illiquid investments might not sell quickly.
  • No guaranteed return on investment.

Alternatives

Wine ETFs

These products bundle together winery and winemaker stocks, allowing you to invest in the sector with no exposure to wine assets. Examples of these include AdvisorShares Vice ETF (NYSEARCA:VICE), Fidelity MSCI Consumer Staples Index ETF (NYSE: FSTA), and Vanguard Consumer Staples ETF (NYSE: VDC).

Wine stocks

Companies like LVMH (OTCBB:LVMUY), Diageo (LSE: DEO), and Brown-Forman (NYSE: BF.B) offer you a chance to invest in stocks to grow your money, rather than in physical wine products.

Buy wine yourself

You can always buy the wine yourself. However, you probably won't have the expertise of the Vinovest team, and you need to sort out your storage and insurance yourself.

Verdict

For investors with a solid portfolio of traditional assets, such as stocks, bonds, mutual funds, real estate, or ETFs, Vinovest is a unique way to diversify into alternative assets. Using the expertise of master sommeliers coupled with AI-driven algorithms, you get a portfolio of appreciating wines to invest in. With authentication of the wines an ongoing issue in the industry, Vinovest guarantees you are purchasing the promised vintage, stores it securely on your behalf, and makes it available to sell or imbibe when the time is right.

Vinovest is viable option for investors with the risk tolerance for less liquid investment opportunities and who want to diversify their portfolio into assets that cannot be easily duplicated.