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Opinion

Chateau Lafite: The world’s best liquid asset

Searching for liquidity, high returns? As any bon vivant hedge fund manager will tell you the answer is Chateau Lafite, the wine from the Bordeaux estate owned by the Rothschild family since 1868. While your typical hedge fund recorded an average return of 7% last year, one specialist wine hedge fund, the clearly labelled Wine Investment Fund, returned almost 50%. Since its launch in 2003, this vintage fund has returned its investors the equivalent of 16%. What’s the story behind its success? High-rolling Chinese tycoons, who have a nose for Chateau Lafite and have been buying up bottles almost single-handedly. Some wine merchants claim almost every case they buy ends up in China. While this outstanding trade may be a play on China’s economic miracle, investors need to be wary of the odd bottle being corked. Can the economy continue on its upward trajectory for ever? For those looking for a new carry trade in 2011, wine may also be the ticket, rather than some high-yielding currency of the New World wine regions, such as New Zealand, South Africa or Australia, because it’s value keeps on increasing as the tycoons drink the supply away. Anyone who tries to tell you any different will be vinified.

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