Vindemia 2 will target average tax-free annual returns of 22.7 per cent. It will invest in a portfolio of specialist merchants trading in fine wines with a strong secondary market value.
The product will combine the EIS experience of Ingenious with the expertise of experienced wine traders such Peter Lunzer. Lunzer is the founder of Lunzer Wine Investments and is the main trader for companies in the portfolio. He has over 30 years experience of wine trading and investment experience, with a wide network of industry contacts.
Ingenuous is raising up to £10m for Vindemia, which it sees as attractive in the current economic climate of low interest rates, financial market volatility and inflationary pressures.
The firm says that as well as potential capital growth and low correlation to financial markets, Vindemia benefits from significant downside protection through the EIS structure. This is due to the 30 per cent income tax relief, which means each £1 invested costs the investors 70p, and the ability of investors to offset capital losses against income or capital gains, which can reduce the capital at risk to 35p for every £1 invested.
Ingenuous says the EIS will follow a conservative investment strategy, investing only in specialist wine merchants that trade in mature globally recognised wines with a strong secondary market value. Wines will be supplied as close as possible to the end user, through hotels, restaurants and other commercial buyers, to maximise profit margins.
Ingenious believes fine wine is attractive as an investment due to strong demand and limited supply, with each vintage being unique and not easily replaced once consumed. However, there are risks such as the wine merchants finding it difficult to sell their wine or having to sell it at a loss. This EIS could also face competition from the wine enterprise investment scheme, a similar product.