Wave Financial Group makes its maiden foray after clients invested in the tokenized whiskey fund.

Wave Financial Group, which announced its plans for a tokenized whiskey fund in March, announced September 11 that it had received its first investments from clients. It thereafter picked up 1,000 barrels of Kentucky bourbon whiskey from the Wilderness Trail Distillery. (Institutional Asset Manager)

In July, NEM and Wave Financial Group announced a partnership to launch the Kentucky Whiskey Digital Fund token on the former’s Symbol platform later this year. Evidently, Wave was in talks with Kentucky-based Wilderness Trail Distillery for up to 25,000 barrels of 2020-vintage bourbon – about a year’s worth of production.

Whiskey’s aging process and prices

At the time, Wave Financial President and Manager of Fund, Benjamin Tsai said at the time: “Kentucky Bourbon represents a huge opportunity for investors – as many assets lose value over time, whiskey accrues value due to its unique barrel aging process.”

Demand for whiskeys took off in the latter half of the 2000s, and interest was particularly strong for bourbons. Unfortunately, distilleries did not anticipate this trend. However, whiskey typically requires many years for its production and aging, and as a result, American whiskey prices have maintained an upward trend for the last 15 years.

Investors have been unable to take advantage of the situation – until now. Tokenized whiskey stocks offer an opportunity, however. Any accredited investor can gain exposure to these assets and benefit from price appreciation that is not normally available or accessible in traditional financial markets.

“Our extensive research has shown that the returns from aging Kentucky bourbon are very stable and strong over the circa five-year period it spends in barrels before being bottled, so we are delighted to be able to provide investors with exposure to this price appreciation,” says Tsai.

Tokenization

The tokenization process will take place in a year or two, according to the Friday announcement from Wave.

Tokenization will allow those investors to exit earlier who do not want to hold on for the full five to six-year aging period before bottling.

Titled “Wave Kentucky Whiskey 2020 Digital Fund,” the fund aims to generate a 20% IRR over a six-year investment horizon.

According to Wave, the historical returns from premium Kentucky bourbon whiskey aging in barrels provided more potential upside than other real assets such as fine wine, rare art, and pedigree racehorses.

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Feature Image Credit: Wilderness Trail Distillery