Vinovest is the first online platform designed to provide easy access to wine as an investment asset. This Vinovest review will look at how the platform works, what type of investors it’s for, and whether it’s worth your money.
Vinovest allows non-accredited investors to purchase portfolios of fine wine. The minimum investment is $1,000. Vinoinvest authenticates, insures and stores your collection. As an investor, you own 100% of the wine in your portfolio. In addition, Vinovest has a marketplace that allows investors to buy bottles individually or list their holdings. We found Vinovest to be worth a look for higher-net-worth investors interested in wine as an alternative asset class.
- Portfolios provide diversification over purchasing individual bottles.
- A secondary marketplace allows you the opportunity, but not the guarantee, to sell your collection.
- You own 100% of the wine and can have bottles physically shipped to you.
- High fees (maximum of 2.85% annual fee).
- Penalties for liquidating holdings prior to three years.
- Limited track record of wine as an investment makes this unsuitable as a core portfolio holding.
Getting Started with Vinovest
After I signed up for an account with Vinovest, I was asked the amount I was looking to invest and when I was planning to invest. Then, I was asked to choose from the available portfolio contribution options:
- Conservative. Curates wines with a proven historical track record, in order to optimize for downside protection.
- Balanced. Curates a wide variety of wines for maximum diversification.
- Aggressive. Curates wines from expected high-growth regions.
Once you fund your account, Vinovest invests your money into a portfolio of wines. It’s important to note that you’re not investing in a fund; instead, you own 100% of the wines in your portfolio.
Depending on the amount you’re investing, your portfolio is either algorithmically generated or customized by one of Vinovest’s human advisors (see the “Client Tiers” section below).
The process to buy and sell wines for your portfolio takes 2-3 weeks.
Vinovest usually buys cases of wine, which can range in size from 3 to 12 bottles. That means a $1,000 portfolio may have limited diversification, since individual bottle prices are on the higher end. For example, the lowest bottle on the marketplace while I was testing it for this review was $57.
Clients investing over $50,000 get access to a wine futures market, where they can buy wine that hasn’t been bottled yet, but which is expected to increase in value.
Vinovest Client Tiers
Vinovest has four different client tiers. Your tier determines your management fees, investment options, and level of access to a human advisor:
- Standard. For account sizes between $1,000 and $9,999. Management fees for standard plans are 2.85%. Portfolios are algorithmically managed. No portfolio customization options are available unless you purchase wines on the marketplace.
- Plus. For accounts between $10,000 and $49,999. The plan has all the same features as the Standard plan, with fees lowered to 2.75%.
- Premier. For account sizes between $50,000 and $249,999. Management fees are lowered to 2.5%. You get access to a human advisor to help construct and manage your portfolio, more portfolio customization options, and the ability to invest in wine futures.
- Grand Cru. For account sizes $250,000 and over. You get the same benefits as Premier, with fees lowered to 2.25%.
Once you sign up, you get immediate access to the Vinovest marketplace, which allows you to buy and sell individual bottles for and from your portfolio.
These are wines stored by Vinovest and owned by Vinovest investors, not wines anyone can come on and list from their own personal collection.
There is no minimum investment needed to start using the marketplace, as these bottles are not subject to the $1,000 minimum required to buy into an algorithmically-generated portfolio.
If you’re looking to sell wine you invested in with Vinovest within three years after the initial investment, you’ll pay a 3% early liquidation fee.
How Vinovest Stores and Insures Your Wine
Vinovest stores your wine in facilities within the United States, Denmark, France, Singapore and the United Kingdom.
Storage facilities are bonded, which means they don’t have to pass through customs, and can therefore avoid value-added taxes (VAT) and excise duty taxes.
During storage and shipping, wines are 100% insured to their market value price at the time of the claim.
How Shipping Works
If you purchased a bottle of wine, either on the marketplace or within a portfolio, you can have it shipped to you.
Wines purchased for your managed portfolio by Vinovest — i.e., those not acquired via the marketplace — can only be shipped by the case. In other words, you can’t take out a bottle from one collection and a separate bottle from another collection; you must ship an entire case. This protects the wine’s resale value, as their network of buyers will usually buy cases of wine rather than single bottles.
Individual bottles of wine purchased via the marketplace can be shipped.
Your shipment is 100% insured through Vinovest.
Vinovest doesn’t have set prices for shipping. Prices vary based on your locale, the location of the wines, the value of the wines being shipped, and the weight of the wines.
It’s here that you’ll likely be hit with taxes and tariffs, both when your collection is taken out of the bonded facility and when the package arrives at your home.
How Will Your Investment In Wine Be Taxed?
Gains on wine are subject to collectibles taxes.
- For investments held longer than a year, you’ll be subject to a 28% tax rate.
- Investments held less than a year are subject to ordinary income tax rates.
This is an important consideration when comparing returns of collectibles to those of equities, as the maximum long-term capital gains rate is 20%.
How Do You Make Money With Vinovest?
When investing in wine, you’re hoping to eventually sell your collection at a higher price than you paid.
Fine wines tend to appreciate, as they can get better with age. Another advantage of wine as an alternative investment class is that the supply of any given bottle naturally decreases over time.
That said, fine wine does have a maturity date, as it typically peaks around 10-20 years — although this varies depending on the type of wine and how it’s stored. (Some wines can be aged for decades, but this is the exception rather than the norm.)
Vinovest’s goal is to buy collections of wine before the maturity date, allowing the value to appreciate.
Investment decisions on the platform are largely made by Vinovest’s algorithms. The platform notifies you when a wine is expected to reach its peak value; you then have the option to have Vinovest sell your wine on your behalf (they sell to a network of wine traders and merchants), to continue to hold your wine, or to get it shipped to you.
Once you give Vinovest the go-ahead to sell your wine, expect the process to take 2-3 weeks before you can withdraw your funds.
As long as the investment is held for a minimum of three years, Vinovest doesn’t charge a fee for selling your wine.
Vinovest isn’t meant to be a short-term investment. Expect to hold your wine for a minimum of three years — but ideally five to 10 years — in order to maximize returns.
That said, you’re asked by Vinovest how long you’re looking to hold your investment. Vinovest will then aim to construct your portfolio with a collection optimized for your preferred holding time.
Vinovest vs. Vint
Vint is another popular platform that allows you to invest in wine.
Some of the key differences between Vint and Vinovest are:
- With Vint, you’re buying shares of an already-established wine collection.
- Instead of charging annual management fees, Vint investors pay an upfront sourcing fee of between 8% and 10%.
- Vint allows you to invest in spirits, such as whiskey.
- The minimum to invest with Vint is $20.
Vinovest is designed more for experienced investors who want a higher level of customization within their portfolio. Vint is more for hands-off investors who want to get started with a lower amount of money.
Vinovest vs. Yieldstreet
In contrast to more niche offerings, such as fine wine investment provided by platforms like Vinovest, Yieldstreet caters to those seeking to diversify across multiple alternative asset classes.
These include art, real estate, and marine finance, each offering unique investment benefits.
Yieldstreet’s minimum investment starts at $10,000, and most investments on the platform are designed for accredited investors.
Yieldstreet particularly stands out in its offering of debt and equity investments, providing flexibility in portfolio structuring based on an individual’s risk tolerance and investment objectives. For instance, investments such as art-secured loans and equity investments in globally acclaimed artworks present potentially lucrative returns.
For investors looking at wine investment strictly from a financial standpoint, as opposed to a hobbyist pursuit, Yieldstreet may offer a compelling alternative. Its wider range of offerings could support a more diversified strategy within the realm of alternative investments.
To learn more and to better understand if it’s the right fit for you, read our detailed Yieldstreet review.
Final Thoughts on Vinovest
Vinovest claims that fine wine has appreciated 10.6% per year over the last 30 years, and that wine has outperformed the global equity index by 1.88% annually over the last 15 years.
If you’re considering investing, it’s worth taking a close look at these claims.
First, the data these claims are based on comes from Liv-ex, the largest index of fine wine prices. The Liv-ex Fine Wine 1,000 Index tracks the prices of 1,000 top-performing wines and is a reliable source. Liv-ex started tracking wine prices in 2003 but has backdated some of its indexes to 1988.
Note: Vinovest also has a proprietary index called the Vinovest 100, which backdates to 1983. However, our general guideline is to use third-party data, as marketplace indexes often cherry-pick.
While Vinovest compares the Fine Wine 1,000 to a global equity index, it’s worthwhile to compare returns to the S&P 500 because international indexes have underperformed U.S.-based equities for the last 15 years. (And because most U.S.-based investors have the majority of their holdings in a U.S.-based index.)
For the 15 years between 2006 and 2021, the S&P 500, with dividends reinvested, returned 10.7% (nearly matching the Liv-ex Fine Wine 1,000). But what’s important to keep in mind is that with an S&P 500 index fund, you’re keeping nearly 100% of your return because the fees are close to zero.
With Vinoinvest, wine as a whole returned 10.6%. But you’re paying an annual management fee of 2.85%. This significantly cuts into your returns.
Here’s the difference between a $10,000 investment that returns 10.7% with a 2.85% annual management fee versus zero fees.
- Value in 10 years with zero fees: $45,756
- Value in 10 years with a 2.85% management fee: $30,938
- Total fees paid over 10 years: $14,818
Underperforming the S&P 500 net of fees isn’t a bad thing. After all, bond funds, which most target date funds have in their portfolio, underperform the S&P 500. The takeaway here is that with any investment, you must account for fees when calculating the expected returns.
Of course, there are more reasons than expected returns to carry alternative investments in your portfolio. For example, there’s a benefit in having uncorrelated assets to reduce your portfolio’s overall risk.
Wine has done quite well during times of market turmoil. The Liv-ex Fine Wine 1,000 dropped just 4% during the first quarter of 2020. During the Great Recession (from November 2007 to June 2010), the Liv-ex Fine Wine 1,000 increased by 25.2%. The S&P 500 during this time went down -25.97%.
In fact, in 2015, the CFA Institute published a paper titled, “Fine Wine as an Alternative Investment during Equity Market Downturns.”
“Collectible fine wine prices exhibit a low correlation with stocks as well as higher returns and lower volatility. For these reasons, along with the increasing transparency and liquidity of the wine market, fine wine is gaining credibility among investors as an alternative asset.”
Still, it’s important to remember that with Vinovest, you’re not an index-based wine investor. They’re personally curating your wine portfolio, similar to active stock picking. Even if the wine market is strong, there’s a chance your curated collection could underperform the market.
Overall, the case is surprisingly strong for investors to potentially hold fine wine in a portfolio to reduce risk. I wouldn’t expect it to outperform the S&P 500 when paying such a high management fee, but the limited history of fine wine prices suggests that there is an advantage to holding wine during market downturns.
If you’re interested in investing in wine, Vinovest is a solid option to consider.
Disclosure: I am a paid partner of Yieldstreet, a company that operates an online investment platform, and have been compensated for referring investors to Yieldstreet investments. This financial relationship may influence the content, topics or posts made on this platform. The views and opinions expressed on this platform are purely my own. This content is not intended to provide investment advice. Investing involves risk, including loss of principal. Please carefully review Yieldstreet’s Offering Circular before making any investment.