A new gauge of how high fine wine prices can go has been launched by Knight Frank and Wine Owners, a management and trading platform.

A new gauge of how high fine wine prices can go has been launched by Knight Frank and Wine Owners, a management and trading platform, coming at a time when investment in the noble grape continues to draw interest from high net worth individuals.

The firms have rolled out the Fine Wine Icons Index, which is described as being part of Knight Frank’s Luxury Investment Index that maps trends in tangible, “investments-of-passion” assets. The FWII will track the performance of selected iconic wines from around the world. Despite featuring fewer Bordeaux vintages than a conventional collective wine investment portfolio, wines from the region are still the largest component of the index, it said.

The index contrasts, for example, with the Liv-ex Fine Wine 100, which is operated by the Liv-ex fine wine exchange tracking auction prices for vintages from regions such as Burgundy and Bordeaux in France. A perusal of the Liv-ex Fine Wine 100 index shows the vast majority of the tracked wines as French, with a handful from Italy, Spain, Australia and the US. (Liv-ex, based in London, has a number of other indices tracking wine prices.)

There are a number of wine funds that track prices of these vintages, such as the UK-registered Wine Investment Fund; firms such as the venerable trading and storage firm, Berry Brothers & Rudd, also enable wealthy investors to hopefully profit from their collections. The sector has gained popularity due to the expectation or hope that wine, along with fine art, classic cars and other collectibles, can outperform conventional asset classes and act as a hedge against inflation. There remains some debate on whether they genuinely diversify a portfolio’s overall risk.

Knight Frank said its index displays a total growth of 230 per cent over the last 10 years, which means only classic cars have performed better. Over the shorter term, however, wine has lagged with prices rising by a modest 3 per cent in the 12 months to June 2014.

In the index top 20, Italian wines perform best with interest growing in the best Barolos and Barbarescos from the Piedmont region. The top performer over the past 12 months has been Giacomo Conterno’s Monfortino Barolo Riserva, with prices for the four vintages included in FWII rising between 31 per cent and 54 per cent, Knight Frank said.

“In terms of price performance icons from Burgundy and Northern Italy have performed strongest in recent years, whilst some of the biggest names in Bordeaux occupy the bottom of the index,” the property firm’s statement said.

“Rarer, more iconic vintages from a broad range of locations, such as Italy, Spain, US and Australia also appear on the FWII. Although the production of some of the wines selected may be too limited to offer the liquidity required by a wine fund and to be widely traded on the open market, they will certainly be of interest to wealthy wine connoisseurs and investors and reflect their broadening tastes,” it continued.

The index also tracks a number of Champagnes and Ports. The average value of wine in the index is £859 per bottle with the most expensive being Romanee Conti Monopole Grand Cru at over £9,000 ($14,075) per bottle and the most affordable components priced from £70 per bottle.

“The performance of any fine wine index will reflect the very significant falls experienced by Bordeaux since its peak in mid-2011,” Nick Martin founder of Wine Owners who devised the Index, said.

“Those highs were driven by unprecedented demand from China in the years leading up to 2011. Speculation overtook the interests of an orderly market, with brokers betting on which wines would become the next recognised brands in the Chinese market, creating an investment bubble,” he continued..

Since the bubble burst, First Growth declines have averaged 28 per cent, with certain wines halving in value. For example Lafite 2005 has fallen by almost 49 per cent. However, Martin believes these drops are creating opportunities for investors.