China8217;s wine fund aims to raise 156 mln

Red wine,like other storable goods with limited supplies,has the potential to beat inflation.

China8217;s DeRouge Fund plans to raise 1 billion yuan 156 million in the country8217;s first fund that invests in fine red wine,as stock market bearishness and rising inflation fears spur innovation in China8217;s competitive asset management industry.

The close-end fund,which targets wealthy individuals,will buy top red wine from France8217;s renowned Bordeaux and Burgundy regions,and expects to deliver annualised returns of 15 per cent,according to its sales document.

For China8217;s growing affluent class,there8217;s huge investment demand for alternative assets such as precious metals,commodities,private equity and art collections,said Zhang Haochuan,head of research at fund consultancy Z-Ben Advisors.

Red wine,like other storable goods with limited supplies,has the potential to beat inflation.

For example,the Vintage Wine Fund,managed by London-based OWC Asset Management Co,has risen 67.2 per cent since inception in 2003,according its July report.

Chinese investors8217; desire to preserve the value of their assets against stubbornly high inflation and market volatility has spurred a series of financial product innovations this year.

Lion Fund Management Co this week launched China8217;s first mutual fund that invests in overseas real estate investment trusts REITs,after successfully launching in January the country8217;s first gold fund 8212; the best-performing mutual fund so far this year with a 28 per cent return.

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Fofund Capital this week launched Shanghai8217;s first privately-run fund of funds,seeking to identify winners in a mutual fund market crowded with more than 800 competing products.

DeRouge Fund,which aims to raise 200 million yuan in its first tranche,will start taking subscriptions from investors next month,with a threshold of 1 million yuan from individuals and 10 million yuan from institutions. The fund has a lock-up period of five years.

China8217;s stock market has been sluggish; investment in the real estate market has been banned,so high-net-worth individuals in China desperately need new investment channels,said David Zhang,marketing chief of the Beijing-based fund.

Top red wine is limited in supply and their value is likely to rise in the long term as China is set to become the world8217;s third-biggest market for top wine.