Equity markets have languished but investors in fine wines have reason to look cheerful towards the half-way point of 2008 after prices of fine wines hit a record high in April. The London International Vintners Exchange 100 Index – which tracks the price of around 70 leading wines – is up 22.3 per cent over the past 12 months and up by 7.4 per cent since the start of this year. And since July 2004, the Liv-ex index level – which stood at 257.6 at the end of April - has more than doubled. The performance since the start of this year compares very favourably to that of, say, the MSCI World Index of developed countries’ equities, showing negative total returns at -4.28 per cent. Although prices on Liv-ex retraced some gains last autumn, the upward trend for much of the present decade underscores how collectable items such as fine wines, art, antiques, jewellery, classic cars and musical instruments can generate significant long term returns for investors. The investment performance of fine wine also adds to the recent trend of interest in "alternative" sectors such as private equity, hedge funds and commodities. The Liv-ex 100 Index covers Old World wines, around 90 per cent of which are from Bordeaux; the remainder includes wines from French regions such as Burgundy and the Rhone and some Champagnes such as Krug. Old World wines, which exist in limited amounts, are achieving high prices due to supply constraints and also due to strong demand stemming from the recent surge in bonuses and salaries in London, New York and other major financial centres. Although professional merchants can deal directly via the Liv-ex exchange, for private investors, the main main avenues are through merchants such as Berry Brothers & Rudd in London; auction houses such as Christie’s, and through collective investment funds, a number of which have been launched in recent years. An example is the the Wine Investment Fund, a UK-registered fund which is open to private investors. This particular fund focuses mainly on vintages from Bordeaux. With all such relatively esoteric markets, however, investors are typically advised to study these areas carefully and remember that such investments are long-term in character and not immune to developments such as a long economic downturn or sudden change in consumer fashion.