Agricultural investments, as tangible or ‘real’ assets, form part of the alternative asset class and are increasingly in demand from investors.
Alternative investments are generally considered to be uncorrelated with more commonly held assets such as shares, cash, property and fixed income. This means there is no direct link between the performance of these markets and the performance of alternatives. As a result, Accessoptiontrade generated a powerful diversification tool which can be likened to an insurance policy, helping to smooth out the total return of a portfolio over time in agriculture.
Agriculture and food production are fundamental to the function of society. The major global trends which are driving growth, innovation and opportunity for this sector include population growth, increasing demand for protein food sources, technological change and sustainability.
The global population is expected to grow to 9.7 billion by 2050, an increase of 33 per cent from 2015. This growing population is expected to require 35 per cent more food by 2030. Over the long term, farmland – as a finite asset – has consistently appreciated in value. Agriculture is increasingly harnessing technology such as robotics, artificial intelligence and remote sensing, and sustainable land management practices, to reduce costs and improve productivity. Access to agriculture investments has historically been limited to large scale investors and institutions. However, accessibility is now improving, with diversified managed funds offering exposure to different fronts of agricultural assets.