The Liv-ex Fine Wine 50 index of the world’s greatest wines is underperforming the FTSE 100 and prices are pulling back, as economic uncertainties weigh on demand for fabulous wines. The news presents an opportunity for long-term wine investors to pick up a bargain.

In the last few weeks, I have spent some time reading through materials from people investing in, and touting the benefits of, what are known as collectables. And not surprising, really, when Greek debt woes, prospects of yet more central bank money printing and the rest are shaking confidence.

Whether it is art, classic motor cars, watches, jewellery or fine wine, barely a week goes by, it seems, when a new fund is not launched or the benefits of one of these asset classes does not get some attention. As explained in these pages recently (click here, and here), the market for art funds, for example, is seeing plenty of activity.

In the case of wine funds and direct investment in the stuff, the past decade has witnessed a real surge in interest, with some of the buying coming out of booming Asia. Some of the prices fetched are extraordinary. A rare case of Romanee-Conti 1990 Domaine de la Romanee-Conti Burgundy sold for a cool HK$2.32 million (around $297,400) in Hong Kong, which is a price auction house Acker, Merrall & Condit said set a world saleroom record for that vintage (Source: Bloomberg). As a sign of the power of Asia buyers, the wine was sold to a Hong Kong collector.

Some of the returns achieved by wine-focused funds can be impressive, more than holding their own against say, a long-only fund investing in equities. Take the Nobles Crus Fund, a Luxembourg-registered SICAV managed by Elite Advisors (launched in November 2007). The fund has clocked up performance of 7.97 per cent since the start of this year (as of 30 September); last year, it achieved total returns of 13.41 per cent, and in 2009, 9.79 per cent, and in 2008, 20.39 per cent (all the more impressive when one remembers that the MSCI World Index of developed countries’ indices slumped about 40 per cent that year.)

The Wine Investment Fund, which is a UK-based vehicle structured as a limited partnership with a five-year holding period, requires a minimum investment of £10,000. Valuations of the fund are referenced to the London-based Liv-ex indices of prices for fine wines (valuations are on a monthly basis). The fund has, on its August 2003-August 2008 holding tranche, delivered annualised returns of 15.84 per cent on payouts; in the period of November 2006-November 2011, it made annualised returns of 13.06 per cent.

All the wine stored in this fund - as with many other funds of this type - is held in a UK government bonded warehouse, so there is no duty or value added tax to pay (contrasting with a situation when a person invests by buying and selling bottled wine directly). There is also no UK capital gains charge.

So the appeal of wine investing can be easy to see. And of course there is the fun of investing in something that it is also, let’s be honest, great to drink. Fund investment can be rewarding, but some investors, if they have the time and resources to create their own cellars and conduct the research necessary, can develop their own collections.

There are, however, possible flies in the ointment, at least according to some new market data.

In a report on Liv-ex price data, the Liv-ex Fine Wine 50 of the world’s greatest wines showed the index has fallen 9.3 per cent over the year to date (as of end-October), although that still means the index has delivered a heady 135.2 per cent return over five years. The broader Liv-ex 100 Fine Wine index has fallen 8.4 per cent. Meanwhile, the FTSE 100 Index of blue-chip equities is down 6.0 per cent. And although you cannot drink it, the price of spot gold has left other asset classes trailing, up by 17.5 per cent.

The economic uncertainties may even be starting to affect demand for these fabulous wines. And after such an impressive upward run, it may also be the case that profits are being taken. Judging by the run of recent years, however, any significant pullback in prices might be an opportunity for long-term wine investors to jump back in.

Remember, dear readers, that with wine, the general idea is to drink it eventually.