Today, the Financial Times published a report on the valuation methodology of the
Nobles Crus fund, managed by Elite Advisers.
As part of the research for the article, Liv-ex was asked to value the fund’s larger
holdings of Bordeaux wines, which together account for around a third of the total
assets.
As highlighted in the table below, which details the top 10
Bordeaux holdings, our valuation differs significantly from that of Nobles
Crus. In total, we valued the top 50 holdings at €26m, as opposed to the €36m stated
by the fund itself. Nobles Crus' valution is 38% higher. .
All values as of 31
August 2012. The "Diff" is the premium of the Nobles Crus valuation over the Liv-ex Mid Price.
Noble Crus performed their valuations, according to the FT,
by taking “the average of two prices from auction houses, without removing
commissions, and two from wine merchants.”
The Liv-ex Mid
Price is based on actual Bid, Offer and transaction prices on the Liv-ex
Fine Wine Exchange (i.e. the price merchants are trading the wine at in B2B
transactions). We believe it is the most accurate price available in the
market.
Wine fund valuation is a subject we tackled as far back as
2009 in one of our monthly market reports (download).
What we wrote then still holds true today:
“With investors in general asking for ever-greater standards of
transparency and accountability – understandably, given recent events in the
financial world – it is important, even crucial, that the wine fund sector
meets these standards. The adoption of a common and transparent valuation
methodology would be one positive move – enabling investors to better choose
between the different options available and to accurately compare their
performance. Of course, in a relatively illiquid market an exact valuation is
always difficult. But with the Liv-ex Mid Price, we feel we have the created
the best fully independent measure of real market value.”
Although
the Liv-ex Mid Price (as used by many of the major UK wine funds) is provided
to professionals only, accurate market data for thousands of wine is made
available to collectors at Cellar
Watch. (For more on the data available see
here.) Basic packages are free.
