Abstract
This study provides useful insight into wine as an alternative investment. In order to investigate the viability of wine as an alternative asset a wine index is created by means of the repeated sales-regression method. Using a dataset that stretches over the period January 2013 to December 2017, the return and diversification benefits of South African-produced fine wine are evaluated by comparing the performance of wine to that of bonds, gold and equity. A correlation analysis between each asset is performed to analyse whether wine could deliver diversification benefits. The data analysis indicates that wine does not deliver higher risk-adjusted returns compared to equity, but does deliver higher risk-adjusted returns to bonds and gold. The results also show that wine has a weak correlation to the traditional asset classes included in the study and should, therefore, be considered for diversification purposes.
M.Com. (Financial Management)