Revelation Top 25 per cent agriculture NOT risky and pays good returns

Nov. 15, 2009 - PRLog -- Does Agriculture Improve Portfolio Performance reveals that over the last 28 years, the Top 25 per cent of agriculture would have been a valuable addition to a diversified investment portfolio.

AAG Executive Chairman, Marcus Elgin has spent over 24 years in the agri sector and said "until very recently, agriculture has been overlooked for investment. The "smart money" sees through weather, commodity prices and macro economic conditions, and it sees through the problems faced by underperforming farms.

"The top 25 per cent of agriculture has achieved a compound annual growth rate (CAGR) of 10.2 per cent over the last 28 years and 11.2 per cent over the last 12 years. The myth of generally poor farm performance and massive volatility has been busted," said Mr. Elgin.

"The report should encourage intelligent and "long view" investors to consider adding agriculture to their investment portfolio. Over the 28 year time horizon, it would have slightly reduced overall returns, but significantly reduced portfolio risk.  Over the last 12 year time horizon, an investment in agricultural would have both increased returns and reduced risk," said Mr. Elgin.

According to the AAG report, agriculture is weakly negatively correlated to major asset classes such as Australian shares, international shares, Government bonds and cash.

"This means that agri-investment can act as a shock absorber during difficult market conditions - like we have just experienced with the GFC," said Mr. Elgin.

"It is vital in today's unpredictable market to manage risk through diversification and agriculture is a great option to consider," said Mr. Elgin. "A significant allocation to agri investment over the last 2 years would not have lost value - unlike almost any other asset class.  Super funds picking through the wreckage of investment returns might want to reconsider an allocation to agri at the next review point."

"Looking to the next 12 months, we predict a boost of interest in agri-investment due to investor's demands for tangible assets, stable long-term returns and low risk," said Mr. Elgin.

Does Agriculture Improve Portfolio Performance is an update to the paper AAG released in 2005. It compares Australian shares, Australian cash, Australian 10-year bonds, Australian listed property trust, International shares and International bonds against the top 25 per cent of agri-investment, over the last 28 years. A supplementary report looks at the last 12 years, and introduces a comparison to direct property investment.  Contact AAG for a copy of the full report.

No part of Does Agriculture Improve Portfolio Performance other than the detail in this media release may be reproduced without the permission of AAG.  Does Agriculture Improve Portfolio Performance is copyright and the property of AAG.

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The Australian Agribusiness Group provides leading expertise in research, investment management and agribusiness consulting nationally. Please visit: www.ausagrigroup.com.au

AAG's sister company is AAG Investment Management
http://www.aagim.com.au/