Agri would have buffered GFC Super Slaughter

Nov. 25, 2009 - PRLog -- International pension funds have recognised the local value proposition and invested well over $1.5 billion (about three times the local total) into Australian agriculture.  If Australian superannuation funds had invested in Australian agri, their members would have been buffered from the super slaughter of the GFC.


AAG Executive Chairman, Marcus Elgin said "the GFC has wiped out 27% of Australians superannuation contributions[1]. If some of the money managed by superannuation funds was invested in the top 25% of agriculture, then those funds would not have suffered as much a loss of value.  It is proof of the simplest idea of reducing risk through diversification".


Most Australian superannuation funds have yet to acknowledge that the top 25% of Australian agriculture is a viable investment option, despite providing 11.2 per cent returns over the last 12 years but with only one third of the volatility of the All Ords, according to the paper Does Agriculture Improve Portfolio Performance by leading agribusiness researcher Australian Agribusiness Group (AAG). In FY 2009, AAG sister company AAG Investment Management has seen no reduction in the capital value of their nation wide $300m+ portfolio under management.


"Superannuation funds should acknowledge agriculture acts as a "shock absorber" during difficult times because of its negative correlation to major asset classes such as Australian and  international shares, low volatility and it's slower investment cycle" said Marcus Elgin.


"Does Agriculture Improve Portfolio Performance provides the evidence for Australian superannuation funds to question why they only have a negligible allocation to agriculture, and to change that position now.  Agriculture is a stable, low volatility, tangible asset," said Marcus Elgin. "Australia is a globally competitive agricultural player, in a context where the fundamentals of the need for an increasing food supply are unquestionable. Remember - if you don't eat, you die."


"From 1992, Australian's have compulsorily been contributing to their superannuation.  We are sure that they would rather be investing in something real, something tangible, something Australian, and something that Australia does really well in.  Something not volatile and something which has a demonstrable, long term track record of 10% plus compound annual growth.  That "something" is top 25% of agriculture.  Superannuation investment strategies should be about securing the future - clearly, much of the investments made over the last few years are not doing that." said Marcus Elgin.


[1]  Annual Global Wealth Report, released by management consultancy Boston Consulting Group.htdjky

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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/