CHEERS TO ENHANCED PORTFOLIO PERFORMANCE: WINE AS A UNIQUE ASSET CLASS

Mesias Alfeus, Anton Blignaut and Jean-Pierre Viljoen
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Mesias Alfeus: Department of Statistics and Actuarial Science, Stellenbosch University, Stellenbosch 7602, Western Cape, South Africa2National Institute for Theoretical and Computational Sciences, (NITheCS), South Africa
Anton Blignaut: Department of Statistics and Actuarial Science, Stellenbosch University, Stellenbosch 7602, Western Cape, South Africa
Jean-Pierre Viljoen: Department of Statistics and Actuarial Science, Stellenbosch University, Stellenbosch 7602, Western Cape, South Africa

International Journal of Theoretical and Applied Finance (IJTAF), 2025, vol. 28, issue 03n04, 1-21

Abstract: This study has two main goals: first, to construct a new South African Fine Wine (SAFW10) index using a repeat-sales regression methodology [M. J. Bailey, R. F. Muth & H. O. Nourse (1963) A regression method for real estate price index construction, Journal of the American Statistical Association 58 (304), 933–942] based on the 10 best performing wines that confirm high-quality and liquidity and are highly desirable assets. Second, it examines the effects of adding this new wine index to a broader investment portfolio. Our analysis reveals that including South African wine assets can improve portfolio growth rates and diversification in line with the literature on wine investment [P. Masset & C. Henderson (2010) Wine as an alternative asset class, Journal of Wine Economics 5 (1), 87–118; L. W. Sanning, S. Shaffer & J. M. Sharratt (2008) Bordeaux wine as a financial investment, Journal of Wine Economics 3 (1), 51–71]. This study is the first attempt to develop a wine index in the South African market, adding a valuable option to the financial instruments available to investors in developing markets.

Keywords: Diversifying fine wine index; growth-optimal portfolio; Markowitz model; wine investment (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S0219024925500128

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