LONDON – The Internet has yanked the cork out of wine as an investment class, with trading volumes bubbly and some index values up 40 percent to 45 percent in the past year or so, market professionals say.

Web-based electronic trading platforms mean investors can buy and sell wine anonymously with much the same ease as other investment assets. The Internet also has made research into pricing and availability easier for would-be investors.

“More people are investing in wine. It’s not such a niche, closed market like it used to be,” said Anthony Maxwell at The London International Vintners Exchange, an electronic trading platform for fine wine, which launched in July 2000.

In the first six months of this year, the exchange already has matched more trades than it matched in the whole of last year. Last year, the value of wine traded on the exchange amounted to more than 10 million pounds ($18 million).

Wine investors hope for capital appreciation over the lifespan of a fine wine, which can exceed 50 years. Affordability is also compelling: fine wines cost much less when they are young.

“We have traded wines at 50,000 pounds for a case of 12 bottles and we have also traded at 100 pounds a case. It depends on the wine, the age,” said Maxwell.

The London International Vintners Exchange also operates the Liv-Ex 100 index, which tracks the prices of 100 wines. In the past 18 months, the index has risen in value by between 40 percent and 45 percent, according to Maxwell.

Some of that value rise is the result of new investors coming into the sector from Russia and China, which, when coupled with limited availability, has helped to drive prices higher.

“These are trophy assets, like paintings, and as wealth grows in the world all these people are jockeying for trophy assets, in particular the top clarets,” said Dan Bunting at Fortis Wealth Management.

Most investors put their money into wine in conjunction with other investments in an attempt to diversify their portfolios.

Though wine investing doesn’t offer dividend yields, it does offer capital appreciation, in a similar way to owning property, Bunting said.

“It’s basically a low-correlation, good absolute return commodity,” Andrew Davison, one of the two investment managers for the Vintage Wine Fund, which is based in the Cayman Islands but managed by London-headquartered OWC Asset Management.

He added that his fund has made around 11 percent in the first six months of the year, and is currently on track for a return of more than 20 percent on an annualized basis. Last year, the fund made around 11 percent.

The Vintage Wine Fund aims to achieve high capital appreciation by investing in wine from France’s Bordeaux, Burgundy, Champagne and Rhone Valley, Italy’s Tuscany and Piedmont, and Portugal.

Most wine bought for investment comes from the Bordeaux region of France, home to much-heralded vineyards such as Lafite, Mouton Rothschild, Cheval Blanc and Petrus.

The area has carved out a niche in the wine-investing world due to the large size of its properties and because it has recently benefited from investment, said Davison. The area is so important to the trade that variations in its vintages can cause significant price swings.

Liv-ex’s Maxwell said about 10 percent of the Liv-Ex 100 index’s rise in value came in June as investors bought the new 2005 vintage of Bordeaux wines at record prices. He said that conditions were ideal for wine growing that year – the area didn’t get too hot and there wasn’t too much rain.

Just as the weather is unpredictable, so too are the markets, although steady – if unspectacular – gains may be ahead for wine investing. The Internet means that prices might be sharper and margins lower, but volumes are on the rise, said Maxwell.

Added Bunting: “There’s a lot of money sloshing around.”

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AP-NY-07-31-06 1751EDT

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