Whisky distillery barrel room
By Jeremy Howard, CEO & Co-Founder

Whisky distillery barrel room

Important NoteNothing in this research note constitutes financial advice. The content below is for information and educational purposes only. Always do your own research and consult a licensed financial advisor before making any financial decision.

Fine Whisky Trounces Mainstream Assets

The price performance of Fine Whisky has been nothing short of spectacular over the past decade (2012 to 2022):

Fine Whisky vs Mainstream Assets 2012 - 2022

No mainstream asset comes close to Fine Whisky's performance over the past decade

Between 2012 and 2022, Fine Whisky has returned more than double the rise of the next nearest mainstream asset class (US Equities):

Asset Class Price Performance 2012 -2022

Rare Whisky 101 and Bloomberg

Since 2012, Fine Whisky has returned a compound annual growth rate (CAGR) of +20.0%, a truly remarkable performance over such a long period of time.

A representative portfolio of Fine Whisky purchased on 31st December 2012 for US$100,000 would be worth well over US$500,000 today.

Low Volatility

The exceptional returns of Fine Whisky have been achieved with remarkably low volatility.

This means that the ‘risk-adjusted’ returns of Fine Whisky (Sharpe Ratio) have been even more impressive:

Sharpe ratio 2013 - 2022

Source: Rare Whisky 101 and Bloomberg

Any Sharpe Ratio above 2 is considered ‘very good’ (US Equities and Bitcoin achieved this), and anything over 3 is considered ‘excellent’. With a Sharpe Ratio of 12.6, Fine Whisky needs a new category all of its own!

It seems surprising that Fine Whisky outperforms Bitcoin on a risk-adjusted basis. Bitcoin has, after all, risen much more in absolute terms (+135.2% CAGR versus +20.0% CAGR). But Bitcoin’s stomach-churning volatility and massive drawdowns (annualized volatility of 51.7%) drag down its Sharpe Ratio to less than that of US Equities. Adjusted for risk, Bitcoin is a much inferior investment asset to Fine Whisky.

No Correlation with Mainstream Assets

Successful portfolio construction revolves around the concept of correlation. ‘Non-correlated’ assets move in the opposite direction to the main portfolio constituents, providing diversification and lowering overall risk.

If you add Asian Equities to a portfolio of US Equities, you achieve little in terms of diversification, given the high correlation between the two. But adding Fine Whisky is a different matter. As the table shows, Fine Whisky is uncorrelated with most mainstream assets, and negatively correlated with some equity classes. This makes Fine Whisky even more useful as an alternative asset class:

Fine Whisky Mainstream Assets Matrix

Source: Rare Whisky 101 and Bloomberg

Performance Conclusion

What Drives Fine Whisky Prices Upwards?

The Whole World Loves Whisky

Fine Whisky Supply is very Limited

Age is Everything

‘Ghost’ Distilleries Dominate Investment Performance

Special Bottlings

It’s All in the Name


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