Two former investment bankers, Brian Mota and Timothy Clew, have teamed up to create a private-equity wine investment fund, the only fund of its kind in the US. It's called "The Wine Trust Partnership" or "TWT Partners." The fund buys bottled wine and wine futures (wine that has been made but has not yet been bottled). These purchases are made directly from négociants to lock-in lower prices and secure significant quantities for investment of the most sought-after producers. Clew noted "[t]his was an opportunity to take Wall Street-type disciplines and apply them to an asset class that was largely devoid of that type of thinking."
The fund is different from other wine funds in that it's structured as a private-equity fund instead of as a hedge-fund. Once money is invested, it cannot be touched for eight years which allows the investors the flexibility to not sell during a down market (versus a hedge-fund model which tends to hold investments for a much shorter duration).
The genius of a wine fund is caters to investors seeking to invest in "hard assets," investments with intrinsic value, like gold or commercial real estate. "Returns from wine investment have consistently outperformed other asset classes," said Miles Davis, a partner at London-based Wine Asset Managers LLP.
TWT Partners is also unique in that the fund purchases wine futures. Wine futures are also called "en primeur." Wines are purchases early while the vintage is still in a barrel, usually 18 months prior to the official release of the vintage. En primeur wines can be purchased at much lower prices compared to what they will be once bottled and released on the market. Additionally, purchasing en primeur wines allows companies like TWT Partners to secure wines that have very limited quantities and be difficult to get after they are released.
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