The Fine Wine Market Shows Unwavering Stability Amid Economic Uncertainty
Annualised volatility of the Liv-ex 50 and FTSE 100
The graph below measures the volatility of the FTSE 100 in comparison to the Livex Fine Wine 50 which tracks the 10 most recent physical vintages of the Bordeaux first growths.
A surging US Dollar and slumping Sterling is causing havoc in global financial markets (see link to The Economist below).
In troubled economic waters, fine wine has traditionally proved to be a stable and far less volatile life raft than traditional stocks and equities. Year-to-date, the Liv-Ex Fine Wine is up 4.3%, while the FTSE 100 is down 5.5%. This time last year, both indices were at roughly the same level, having recovered from the shock of the 2020 pandemic. However, as the chart above shows, the FTSE has remained volatile, suffering further setbacks like the Ukraine War in February 2022.
By contrast, the Liv-ex 50 continued to make gains through the post-Covid bull market of 2021 and has held its course even amid the turbulence of the last few weeks and months.
The Liv-ex 50 index has inherent low volatility given its narrow focus but it is demonstrative of the wider stability and liquidity offered by fine wine, especially given the much broader, more diverse scope of today’s market.