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What the wealthy invested in last year

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Fine art, watches and wine were the most popular 'investments of passion' among the rich last year.

The Knight Frank Wealth Report 2013 found that jewellery, classic cars, sports teams and stamps were also popular investments for high net wealth investors – people with net assets of over US$30m.

The rich allocated on average 4% of their portfolios to ‘investments of passion’ in 2012, according to the report.

Over the ten years to the end of September 2012, the Knight Frank Luxury Investment Index (KFLII), which shows how various collectable asset classes have performed, grew by 175% compared with the 36% rise in the UK’s FTSE 100 Index, including dividends.

Classic cars rose 395% just behind gold which rose 433%. Fine wine over ten years rose 166%, although the fine wine index, Liv-ex 100 dropped 9% over the 12 months to September 2012.

Investment in fine wine in 2012 increased 10% globally and 40% in Asia. Of the ‘investments of passion’, after investments in fine art, the most popular and fastest growing investment is in wine.

Andrew della Casa, director of The Wine Investment Fund, said:

“The study details how wealthy investors worldwide are looking for assets that satisfy both head and heart. This latest Wealth Report maps out where investment meets personal passions and shows that investors allocated on average 4% of their portfolios to ‘investments of passion’ in 2012. This is in line with our experience of our clients at TWIF, where we have always considered wine as being an essential 4% to 5% element of an investment portfolio. Fine wine not only offers diversification, it is a tangible asset and can generate high risk adjusted returns.

“The last three months have seen the Liv-ex rise 7% and we retain our forecast of 14% growth for 2013.”

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