Fine wine vs stocks: how do risk and returns compare?

• Measured by downside risk, fine wine has scored better than stocks, with higher Sortino ratios than the S&P 500, FTSE 100 and Dow Jones since 2004
• In the 2008 financial crisis, the S&P 500 fell more than 50% while the broadest fine wine index declined roughly 10.5%
• Fine wine’s correlation to the S&P 500, FTSE 100 and Dow Jones has been low over 20+ years

Fine wine vs stocks on returns and downside risk

Fine wine and stocks are each safer in different ways, and neither wins across the board. Equities have delivered higher long-term returns, while fine wine has scored better on downside risk, fallen less in crises such as 2008, and moved largely independently of stock markets. The comparison depends on what an investor needs protection from: sharp drawdowns, inconsistent returns, illiquidity, poor selection or a zero valuation. This guide sets out how the two assets compare on each measure and what that means for a portfolio holding both.

Equities have historically had the edge on raw long-term returns. Since January 2006, the S&P 500 has delivered 8.9% compound annual growth, a figure that includes one of the strongest and longest bull runs in market history. In wine only the Burgundy index comes close over the same period, but other major indexes have all delivered comfortably above 5%. Which asset wins over any particular window has varied depending on the period: fine wine, led by Burgundy and Champagne, outperformed through 2013–2022, while the S&P 500’s technology-driven bull run gave it the edge across 2015–2024.

On downside risk relative to return (measured by the Sortino ratio, which looks specifically at return per unit of downside volatility rather than total volatility), fine wine has scored better than the S&P 500, Dow Jones or FTSE 100 indexes since 2004.  The major multi-region wine indexes, and sub-indexes for Italy, Burgundy and Champagne, all have Sortino Ratios between 1.26 and 3.05, while the main equity indexes are all below 1.  This is a key part of the low-volatility, steady growth reputation fine wine has built.

Fine wine isn’t immune to real losses. Both fine wine and the S&P 500 have had significant drawdowns since 2004, even if they didn’t happen at the same time or for the same reasons. During the 2008 financial crisis specifically, the gap was stark: the S&P 500 fell more than 50%, while the broadest wine index declined 10.5%. In 2022, the pattern repeated in wine’s favour – fine wine returned roughly 10.7% for the year while the S&P 500 fell 19.4%. 

Fine wine has also had fewer losing five-year periods than equities. Of the 215 monthly five-year holding periods since January 2004, the share ending in a loss was:

• FTSE 100: 47, a little over 20%

• S&P 500: 39, a little more than 18%

• Poorest-performing major wine index: just more than 15% (33 periods)

Over this period, the major Italy index has seen zero negative 5-year holds. The major Burgundy index has only two, and the major Champagne index just one.

Why fine wine’s low correlation to stocks matters

Low correlation to mainstream equities is fine wine’s most valuable attribute for many investors, and the latest numbers support it.

Pearson correlation measures how closely two assets move together, from -1 (perfectly opposite) to +1 (in lockstep), with 0 meaning no relationship.

The Pearson correlation of the Dow Jones to the S&P 500 is 0.95, as expected, since all 30 Dow Jones companies are also in the S&P 500. A Pearson correlation of 0.76 between the FTSE 100 and the Dow Jones is more informative, and shows that two equity markets on different continents still move closely together.  The closest correlation between either of the two most commonly quoted wine indexes and these three major equity indexes is 0.12. 

That low correlation means the direction of equity markets has told investors very little about where the fine wine market will go next. That independence is what makes fine wine a diversifier for an equity portfolio, rather than a replacement for one.

What the averages hide: dispersion between individual wines

What is often left out of “wine vs. stocks” comparisons is that index-level numbers describe performance that is aggregated across a large number of wines, and the spread of outcomes between individual wines is very wide. 

A diversified equity index fund by design gives investors close to the market average. A wine portfolio’s actual outcome depends heavily on which specific wines you hold. This makes selection criteria matter more in fine wine investing than in passive equity investing, and is why “the fine wine market returned X%” is a less useful number for an individual investor than it sounds.

Fine wine also carries risks that return and volatility figures do not capture:

• lower liquidity than equities
• storage and provenance considerations
• counterparty risk with the platform or merchant holding the wine

Our guides to whether fine wine is a liquid investment and whether wine investment is safe cover these in more detail.

Why fine wine works alongside stocks, not instead of them

Fine wine does not need to beat equities on returns to earn a place in a portfolio. Its value lies in behaving differently: smaller falls in crises such as 2008, fewer losing five-year periods, and price movements largely independent of stock markets. Those strengths sit at index level, and individual outcomes depend on selection. For investors, the question isn’t which to hold, or which is safer, but to understand why both make sense together.

FAQ: fine wine vs stocks

Is fine wine safer than stocks? 

It depends on the measure of safety. Fine wine has shown better return per unit of downside risk (a higher Sortino ratio) than the S&P 500 or FTSE 100 since 2004, and it held up far better than equities in 2008 and 2022. It has still suffered significant drawdowns, and it carries liquidity and selection risks that index tracker funds do not.

Does fine wine have higher returns than stocks? 

Since January 2006, the S&P 500 has returned Compound annual growth of 8.9% a year against lower, but still high single digits for diversified fine wine portfolios. Fine wine has outperformed in some periods, such as 2013–2022 and during equity downturns, but it is not a higher-return asset class on average.

Why do people hold fine wine alongside stocks rather than instead of them? 

Mainly for diversification. The closest correlation between the two most commonly quoted wine indexes and the S&P 500, FTSE 100 or Dow Jones is 0.12, meaning wine prices move largely independently of stock markets. That makes fine wine useful for smoothing overall portfolio volatility, even though it is not a higher-returning asset on its own.

Do all fine wines perform similarly? No. Index-level returns describe an average across a large number of wines, and the spread between individual wines is very wide. Selection matters far more to an investor’s outcome than in a diversified, passively managed equity fund. Our guide to what makes a wine investment-grade explains how that selection works.

WineCap’s independent market analysis helps investors build diversified fine wine portfolios with full ownership and transparent pricing. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.