Wine Investment Funds - Accilent Capital Management Inc.
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Accilent Capital: Wine Investment Funds

Wine Investment Fund Canada

Wine Investment Fund Canada (WIFC) brings accredited and eligible investors an opportunity to diversify their portfolio, while investing in “Fine Wines” with demonstrated potential for capital appreciation.

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“Fine Wine” is an asset class with historically proven exceptional rates of return with limited correlation to movements either up or down in capital markets. This allows the potential of portfolio diversification without sacrificing performance.

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WIFC purchases investment grade wine exclusively from the Bordeaux region of France, from only established classified vineyards carrying the “Grand Cru Classe” designation.

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WIFC’s wine portfolio is managed by Anpero Capital Limited; pioneers of wine investment, who have already demonstrated stellar performance with their 2003 fund in the U.K.

The following is summary and educational in nature, and is a general overview of investment strategy and objectives that are qualified in their entirety by the detailed information appearing in the fund’s Offering Memorandum. To obtain complete offering documents when they become available, please contact us atservice@accilentcapital.com.

Summary: The time is ripe.

“Fine Wine” is an asset class with historically proven exceptional rates of return with limited correlation to movements either up or down in capital markets, as discussed in the groundbreaking book “Wine Investment for Portfolio Diversification” by Mahesh Kumar BA (Hons), ACMA, ATT, PMC, MBA, DIPIC . This allows the potential of portfolio diversification without sacrificing performance, and is the basis of WIFC’s investment thesis.

Wine Investment Fund Canada’s wine portfolio is managed by Anpero Capital Limited; pioneers of wine investment, and the investment manager and wine advisor of the Wine Investment Fund based in the United Kingdom. This U.K. Fund (which was the first of its kind) was established in 2003, and has had stellar performance over its eight-year life. As WIFC’s wine portfolio managers, Anpero Capital adheres to the same philosophy and will work in concert with its sister fund in the U.K. to buy, hold and sell “Fine Wines” of superior quality to maximize the long-term capital growth.

WIFC purchases investment grade wine exclusively from the Bordeaux region of France, from only established classified vineyards carrying the “Grand Cru Classe” designation. All the wine purchased is physically received, stored and insured (at replacement value) in a bonded environmentally controlled warehouse in the United Kingdom. The fund does not buy any futures contracts – only bottled wine which is aged for a minimum of four years before any vintage is purchased.

Historically, investment grade wine prices are driven by general supply and demand imbalance. Increasing global demand for “Fine Wine” in addition to traditional market growth is surging due to new demand pressures from huge emerging consumer markets in the Pacific Rim, India and Russia. These markets have the potential to dwarf the traditional established centres for demand, namely the US, Europe and Japan. There is only a “Finite Supply” of “Fine Wine” due to non-expandable acreages in certain specific regions under certain exceptional classifications. This phenomenon is what the Managers say will drive values higher over time as supply cannot keep up with growing demand.

WIFC has a term of five years and will be terminated at the end of the fifth year; all net proceeds after fees and expenses will be distributed to investors. The investment objectives of the Fund are the potential for capital appreciation in the investment amount that will be realized when the inventory of wine held by the fund is sold in its entirety and at the end of the five-year term.

For more information regarding Wine Investment Fund Canada call Accilent toll free at 1-877-429-9779 from 9:00am to 5:30pm EST, or email us anytime at:service@accilentcapital.com

Strategy and Objectives

The Investment Objective

The Partnership’s investment objectives (the “Investment Objectives”) are to provide the potential for capital appreciation in the Units that will be realized when the inventory of wine held by the Partnership is sold in its entirety at the end of the term of the Partnership.

The General Partner (as defined below) believes an investment in a portfolio of fine wines produces the potential for capital appreciation in an asset class that according to data compiled in the academic study by Mahesh Kumar, MBA, professor at Royal Roads University, entitled “Wine Investment for Portfolio Diversification – How Collecting Fine Wines Can Yield Greater Returns Than Stocks and Bonds”, and in the experience of the Investment Sub-Manager has historically demonstrated either no correlation or weak negative correlation, and lower volatility of returns when compared to equities and bonds over targeted hold periods. The conclusion is that over a long term, returns on fine wines are positive and largely unaffected by movements in capital markets where most investors hold a majority of their assets. This has the potential for portfolio diversification without sacrificing performance.

Past performance is no indication of future performance and the fact that such portfolios have demonstrated these characteristics in the past is no indication that they will demonstrate the same characteristics in the future.

Investment Strategy and Criteria

The investment strategy and criteria of the Partnership (the “Investment Strategy and Criteria”) is to directly or indirectly buy, hold and sell wines of superior quality from established producers of very good to outstanding vintages over a hold period up to when the wines are ready for drinking or have achieved a certain scarcity value and the supply limited. The underlying Wine Inventory purchased by the Partnership will be from producers and vintages which the Investment Manager and the Investment Sub-Manager consider to be “very good” to “superior” and which offer the required potential to maximize long term capital growth. Wines suitable for purchase by the Partnership will be limited production wines with a majority being “grand cru and cru classé” wines from Bordeaux. The Bordeaux region is chosen because of the quality, price history and an active liquid market for sale of inventory. Only several vintages per decade of the fine wine produced become investment grade wines and gain reputation and higher range scores from wine critics that influence top prices on sale.

Investment grade wine prices have been historically driven and supported by a global supply/demand imbalance. The global demand for superior wine is increasing (in addition to historical demand, this trend is also being driven by emerging consumer markets in Asia and Russia in particular) and there is only a finite supply of fine wine due to non-expandable acreages in certain regions and under certain classifications.

No wines are purchased by the Partnership at the “en primeur” stage (i.e. pre-bottling stage directly from the producer, sometime referred to as a wine “future”) as the Investment Manager and Investment Sub-Manager believe that the potential risks and volatility experienced at that stage of buying are not necessary to achieve superior returns.

The Partnership follows the “Price Step Theory™” investment philosophy developed by the Investment Sub-Manager, Anpero Capital Limited (“Anpero”) and applied to the various tranches of The Wine Investment Fund (“The Wine Investment Fund”) and similar fine wine funds managed by Anpero from the United Kingdom and other applicable jurisdictions, including without limitation Bermuda. The Price Step Theory™ is based on the observation and experience over the last 25 years and on empirical evidence over a longer period that fine wines tend to experience multiple price spikes and plateaux throughout their lives (from bottling through to ageing to drinkability and to consumption of the last bottles of the vintage) that present multiple buying and profit opportunities to the seasoned manager.

An initial upward price in fine wines often occurs when the wines start to be consumed and wine pundits/critics begin to talk about and write about such wines. As the volumes in the market decrease, prices tend to rise, sometimes steeply and quickly. Once the wine increases by a significant amount there may be profit takers who sell, thereby creating sufficient supply to meet demand which creates a price plateau. When that supply runs out however, continuing demand and the increased awareness and growing popularity of the wine causes additional price increases. These “spikes” and “plateaux” can occur several times over the hold period.

There are no mandated investment restrictions or concentration limits imposed on the Investment Manager or Investment Sub-Manager in selecting wines for the Partnership. However, in similar funds managed by Anpero (see description and returns below), the tendency has been to be well diversified, holding 40-45 different wines across multiple producers.

The Investment Sub-Manager as a rule will buy:

  • the most reputable and highly sought after vintages which are typically 4+ years old
  • only wines that have excelled themselves in that vintage
  • wines with the best reputation for ageing ability
  • stock that has been perfectly stored
  • wines that have not just recently risen in price disproportionately to value
  • wines that will be ready for drinking by the end of the 5 year holding period
  • whole units where a unit means one original case of either 12 x 75cl or 6 x 75cl bottles or 6 x 150cl or 3 x 150cl magnums

The Investment Sub-Manager as a rule will avoid:

  • wines that are over-hyped and do not have a recognizable track record or trophy wines not available in commercial quantities
  • unusual bottle sizes
  • wines that are coming to an end of their natural life span
  • “en primeur” wines, as described above
  • split cases

Wines will normally be bought in the United Kingdom where wine merchants holding fine wine under bond are the largest suppliers to the global market and prices achieved in the United Kingdom reflect world supply and demand. In addition, physical stock located in the United Kingdom can be checked for “provenance” more simply when the only journey the wine has undertaken is from the producer to a government bonded warehouse. Wines may also be bought in Continental Europe and elsewhere.

Wines will be stored under optimal and secure conditions at professional wine storage facilities and will be insured at replacement cost. Wines will not be moved, sold or traded during the holding period of the Partnership, except in exceptional cases or if the Investment Sub-Manager (in both cases in the Investment Sub-Manager’s opinion) believes the price of a particular wine to have reached an unsustainable level or to pay any fees or Partnership expenses. At the end of the holding period the wines will be sold on Liv-ex (the London International Vintners Exchange) or by public or private auction or directly to private individuals, restaurants, clubs hotels or casinos known to the Investment Sub-Manager.

For more information regarding Wine Investment Fund Canada call Accilent toll free at 1-877-429-9779 from 9:00am to 5:30pm EST, or email us anytime at:service@accilentcapital.com

Management

The Investment Manager and the Investment Sub-Managers

Accilent Capital Management Inc. (“Accilent”) is the Investment Manager of the Fund, whose role is to ensure that the Investment Objectives, Investment Strategy and Criteria of the Fund are adhered to, and to help select, monitor and manage the activities of the Investment Sub-Manager in selecting and selling wines.

Accilent is registered as a portfolio manager (PM), exempt market dealer (EMD) and commodities trading manager (CTM) by the Ontario Securities Commission and is licensed as a commodities trading adviser (CTA) under the National Futures Association that governs the United States of America.

Accilent has significant experience in developing, marketing and managing multiple investment styles across several funds, including developing and managing a series of flow-through resource funds, assisting in the development of a commodities futures index, acting as investment advisor to an energy fund, acting as the investment advisor to the Canadian series of a Swiss-based fund of hedge funds and being investment advisor and director of a private equity fund aimed at micro-cap funds where there is an income and growth investment objective. In conjunction with other co-managers, Accilent manages approximately $20 million in assets as of the date hereof.

Anpero Capital Limited (“Anpero”) is the investment manager and wine advisor of The Wine Investment Fund, an unregulated collective investment scheme under the laws of the United Kingdom, based in the United Kingdom, and a number of wine investment funds structured and operated in a similar manner to the Partnership. Anpero has assets under management of approximately US$73 million (as at February 22, 2011) invested solely in multiple portfolios of wine. (See historical performance numbers below, included for illustrative purposes only.)
In addition to having Anpero as an active Investment Sub-Manager leading the Partnership in selecting and selling its wines, the Partnership adheres to the investment styles and philosophies developed by Anpero and may purchase units directly from The Wine Investment Fund in jurisdictions where it is offered.
The directors of Anpero are:

Mr. Rodney Birrell, co-founder of Anpero and director of The Wine Investment Fund has an arts degree in economics as well as two law degrees from McGill University. He has lived in Bermuda since 1988 during which time he practiced corporate and finance law for 5 years. Since 1993 Mr. Birrell has been involved in the investment world and in particular as managing director of Bristol Limited, an asset management company. Mr. Birrell holds or has held directorships in a number of international companies including Inter-Ocean Re-Insurance Company, D.H.L. Worldwide Limited and investment funds including funds organized by Macquarie Bank and Quorum Group of Funds.

Mr. Andrew della Casa, co-founder of Anpero and director of The Wine Investment Fund is a law graduate of Oxford University. He joined Deloitte Haskins & Sells prior to moving to Samuel Montagu & Co. Limited and later to Midland Montagu, where he held increasingly senior roles in banking, capital markets and investment management. In 1993, Mr. della Casa established the European investment management operations of American Phoenix, that group’s first permanent presence outside of the United States, prior to founding Alladdin in 1997, which focuses on transaction processing and deposit taking e-commerce for digital platforms. Mr. della Casa holds or has held directorships in a number of investment funds, a European pension fund and fund management companies.

Anpero employs William Grey and Chris Smith as investment managers. Having spent most of his working life in the wine business, including most recently as a shareholder and head of trading for John Armit Wines, William Grey, a languages graduate from Manchester University, has the most extensive experience in maximising the opportunities offered by fine wine as an asset class. Mr. Grey has a great wealth of knowledge both as a trader and as a conduit to some of the finest investment grade chateaux in Bordeaux.

Chris Smith, an economics graduate from Bristol University, worked initially as an economist for the UK government before moving into the financial sector to work first for the Association of British Insurers and then for the UK regulator, the Financial Services Authority. Simultaneously, Mr. Smith built an extensive knowledge of the fine wine market, providing advice and commentaries for clients of a UK broker and, since 1996, has been performing detailed analyses of wine pricing data and using these to identify buying and selling opportunities, generating strong investment portfolio returns.

For more information regarding Wine Investment Fund Canada call Accilent toll free at 1-877-429-9779 from 9:00am to 5:30pm EST, or email us anytime at:service@accilentcapital.com

Anpero Capital Limited: Sub-Managers

Directors of the U.K.-based The Wine Investment Fund

ANDREW DELLA CASA

  • A law graduate of Oxford University, Andrew joined Deloitte Haskins & Sells prior to moving to Samuel Montagu & Co. Limited and later to Midland Montagu, where he held increasingly senior roles in banking, capital markets and investment management.
  • In 1993, he established the European investment management operations of American Phoenix – that group’s first permanent presence outside of the United States – prior to founding Alladdin in 1997, which focuses on transaction processing and deposit taking e-commerce and digital platforms.
  • Andrew holds or has held directorships in a number of investment funds, European pension funds and fund management companies.

RODNEY BIRRELL

  • Holding an arts degree in economics as well as two law degrees from McGill University, Rodney has lived in Bermuda since 1988 during which time he practiced corporate and finance law for 5 years.
  • He has been managing director of Bristol Limited, an asset management company, since 1993, and holds or has held directorships in a number of international companies including Inter-Ocean Re-Insurance Company, D.H.L. Worldwide Limited and investment funds including funds organized by Macquarie Bank and Quorum Group of Funds.

Investment Managers of the U.K.-based The Wine Investment Fund

WILLIAM GREY

  • Having spent 14 years in the wine business, including most recently as a shareholder and head of trading for John Armit Wines, and before that brokering at Fine and Rare Wines, William, a languages graduate from Manchester University, has extensive experience in maximizing the opportunities offered by fine wine as an asset class.
  • William has a great wealth of knowledge both as a trader and as a conduit to some of the finest investment grade châteaux in Bordeaux.

CHRIS SMITH

  • An economics graduate from Bristol University, Chris was an economist for the U.K. government before moving into the financial sector for the British Insurers and the U.K. regulator, the Financial Services Authority.

WIFC Wine: A Sample Of Holdings

Past Investments & Current Holdings of the U.K.-Based Manager

This list may not represent the complete portfolio of the U.K.-based manager. Although this list may reflect previous investments, It may not be indicative of buying intentions for the current Wine Investment Fund Canada.

First Growths

  • Château Lafite-Rothschild, Pauillac
  • Château Latour, Pauillac
  • Château Margaux, Margaux
  • Château Haut-Brion, Pessac, Graves
  • Château Mouton-Rothschild, Pauillac

Second Growths

  • Château Léoville-Las-Cases, St. Julien
  • Château Léoville-Poyferré, St. Julien
  • Château Léoville-Barton, St. Julien
  • Château Dufort-Vivens, Margaux
  • Château Gruaud-Larose, St. Julien
  • Château Pichon-Longueville Baron, Pauillac
  • Château Brane-Cantenac, Margaux
  • Château Ducru-Beaucaillou, St. Julien
  • Château Cos d’Estournel, St. Estèphe
  • Château Montrose, St. Estèphe
  • Château Pichon Lalande, Pauillac

Third Growths

  • Château Palmer, Cantenac-Margaux
  • Château Giscours, Labarde-Margaux

Fourth Growths

  • Château Talbot, St. Julien
  • Château Beychevelle, St. Julien

Fifth Growths

  • Château Grand-Puy-Lacoste, Pauillac
  • Château Lynch-Bages, Pauillac
  • Château Cantemerle, Macau-Haut-Médoc
  • Château Pontet-Canet, Pauillac

Graves

  • Domaine de Chevalier, Léognan
  • Château La Mission-Haut-Brion, Talence
  • Château Pape-Clément, Pessac

Pomerol

  • Petrus
  • Clinet
  • La Conseillant
  • L’Eglise Clinet
  • L’Evangile
  • La Fleur
  • La Fleur Petrus
  • Latour a Pomerol
  • Trotanoy
  • Vieux Château Certain

Saint Emilion

  • Cheval Blanc
  • Angelus
  • Ausone
  • Canon
  • Figeac
  • Magdeleine
  • Pavie
  • Troplong Mondot

Sauternes

  • Yquem
  • Rieussec
For more information regarding Wine Investment Fund Canada call Accilent toll free at 1-877-429-9779 from 9:00am to 5:30pm EST, or email us anytime at:service@accilentcapital.com

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