Braeburn Whisky blog

Risks and rewards. What investors need to know about 2021.

2020 took investors on a bumpy ride. The global economy endured its deepest recession in 74 years, as the pandemic upended all expectations and turned many predictions to dust. Equity markets plunged in late February and March, then rallied strongly in the subsequent months thanks to unprecedented support from central banks and governments. Overall, the S&P 500 performed better than expected, but some major sectors suffered their worst year on record. This experience should provide a lesson for investors looking ahead: Predicting the future is always a risky game.

However, if we did learn anything over the last 12 months it was that the well-established principle of investing for the long-term with a diversified portfolio is still the best advice for a successful, bullet-proof strategy.

What’s next?

In 2021, some economists predict a quick return to normality. Others expect an uneven recovery or even a plunge into another recession. The truth is, no one really knows.

However, all analysts agree that the bull-bear market we experienced in 2020 is extremely unusual and highly unlikely to be repeated. The stock market has already priced in expectations for a stronger emerging economy, which raises the risk that any disappointment in the recovery will rattle investors, leading to the market correction that many are seeing over the horizon.

The unprecedented interventions by government in the economy have created the biggest debt level since the second world war. The consequences of this are likely to begin to unwind over the coming months, especially when it comes to the value of government bonds. Interest rates will continue to fall below historic averages and, as the spectre of inflation returns to the global economic environment, many investors could find themselves losing out if they’re sitting on money in the bank.

5 reasons to invest in Whisky Casks in 2021

One reality that investors will need to become more comfortable with in 2021 is increased volatility. However, diversifying their portfolios with an investment strategy tailored to their specific goal timeline and risk tolerance could help to mitigate the bumpy road ahead. Taking into account the unpredictable investment landscape of 2021, this could be the ideal moment to invest in whisky casks. 

Here are five reasons why whisky casks could be an ideal investment strategy as we enter the uncharted waters of 2021:

  • Performance versus other tangible assets. According to the recent Cask Report 2020, whisky casks are currently outperforming all other tangible assets on the market. 
  • Natural appreciation. Thanks to the naturally appreciating nature of the whisky inside the cask, value is likely to grow even further in 2021 as investors begin to look for safer homes for their funds.
  • Growing demand. Spurred by rising demand from Asian investors, the value of rare whisky has soared, with data showing whisky on a steady upward curve despite the volatility in markets in recent years.
  • Security. In uncertain times, whisky casks provide investors with the security of a tangible asset, which is fully insured and safely stored in government bonded warehouses in Scotland.
  • Constrained supply. Supply of rare single malt was already constrained. The pandemic has now decreased production even further. As demand continues to far outstrip supply, the future of whisky cask investment looks brighter than ever before.

Keep calm and invest in Whisky Casks this year

It is important to approach 2021 with a cool head and a mixture of caution and hope. By diversifying portfolios towards an asset class like whisky casks,  proven to reduce risk and build steadily in unstable times, we can look towards 2021 with increased optimism and a sense of sunnier days ahead. 

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