In May one of Europe’s biggest wine funds, the €109 million Nobles Crus Fine Wine Fund was suspended after it was unable to pay large investors who tried to exit the fund. Between 2008 and 2012 Nobles posted returns of 13% per annum when most funds were struggling. It was revealed that Nobles was using its own independent method of valuation as opposed to using the London-based Liv-ex index – a market for investment grade fine wines. Even when Liv-ex experienced a drop of 23% after 2011, Nobles continued to post significant returns. Auditing firm Ernst & Young was called in after speculations were raised about the record of returns prompting a number of large investors to exit the fund. Nobles was unable to pay them causing regulators in Luxembourg to ban redemptions and new sales of the fund. These developments and the expansion of the wine investment sector have raised questions by regulators about the sector. The following article looks at the asset class and what every investor should know before investing in a wine fund.
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