FSG launches Agri-Investment Facility

20 April 2005

Macquarie Adviser Services today launched the Macquarie Agri-investment Facility, a unique agricultural investment service designed to make investing in agricultural projects easier for financial advisers and their clients.

Macquarie Division Director, Craig Swanger, said the agricultural industry had evolved as an investment sector and was now highly regulated in Australia, with the potential to add considerable value to specific investment portfolios.

Mr Swanger said the Macquarie Agri-investment Facility simplifies the agricultural investment process for "time-poor" advisers by offering a suite of projects which had been highly rated by specialist agricultural ratings firm, Adviser Edge. The facility also includes, a calculators to help advisers blend a number of agri-investments to achieve an appropriate mix to suit the client’s needs.

"During consultation with advisers they told us that they did not have the time to compare and contrast the numerous agricultural investments that are on offer in the market and work out if they fitted into their clients' portfolios," Mr Swanger said.

"We established the new Macquarie Agri-investment Facility as an answer to this need. It simplifies the process for advisers, makes it easier for them to assess and plan their clients’ investments in agricultural projects and ensures the projects they are considering are rated by an expert agricultural team."

Mr Swanger said that in Australia agricultural industry investments were catching up with the industry in the United States.

“Agri-investing in the United States has a greater level of institutional involvement,” Mr Swanger said.

“The Yale Endowment Fund, one of the world’s leading institutional investors, targets an allocation of 20 per cent of the fund to “real assets” including timberland.

“They target this level of investment because they believe it provides them with diversification benefits and risk adjusted returns.

“Research in the United States indicates that over a 40 year period, timberland investments (which includes the ownership of the land) achieved higher returns for their level of volatility than other key asset classes.

“The analysis also shows that timberland returns in the US have had a negative or low correlation with other asset classes, including equities, corporate bonds and commercial real estate.”

Mr Swanger said investment in the agricultural sector could be a consideration for a broad range of investors, not just those who were seeking tax efficiency in their portfolio.

The Macquarie Agri-investment Facility provides advisers with educational material for their clients which explains the benefits and risks of agricultural investments as well as a comparison of cash flows of various horticultural and timber projects.

The calculation tool on the Macquarie Adviser website has a select number of highly independently rated investments and uses a range of product information so that advisers can model potential outcomes for their clients and compare investments on a “like for like” basis in terms of potential cash and taxation flows.

The calculator aims to make it easier for advisers to make well researched recommendations to their clients and more specifically enabling advisers to blend these investments.

There are five projects currently available through the Macquarie Agri-investment Facility and Macquarie has secured an allocation across all five projects to assist advisers in accessing the investments.

Feedback from the market suggests that demand for agri-investments this year is strong and that advisers will need to act quickly if they want to access quality projects for their clients.

"By offering this service Macquarie is not recommending any of the projects that are being offered – that is the role of the adviser. Rather, Macquarie is providing advisers with tools, calculators and research information to make their task of assessing the appropriateness of a particular agri-project to their clients needs more efficient.

The five projects have been rated by Adviser Edge, an agri-business and forestry specialist research house, accredited by van Eyk, which rates more than 90 per cent of the agricultural market.

Adviser Edge uses a five star rating system that assesses the commercial investment merit of a project using quantitative analysis. The key factors that they assess include management capabilities, product market, performance parameters, fees and returns and project site assessment.

The five projects that have been included in the Macquarie Agri-investment Facility are:

  • 2005 Swan Hill Almond Orchard Project
  • W.A. Blue Gum Project 2005
  • Willmott Forests Project – 2004
  • National Viticultural Fund of Australia Project 3
  • Macquarie Forestry Investment 2005

Mr Swanger said the service would continue to evolve and would progressively add more agricultural projects which were researched and considered to be of high enough quality for advisers.

Registration for advisers who wish to use the Macquarie Agri-investment Facility is free of charge.

"This facility is designed to do the hard work for advisers so that they can spend more time focussing on where they really add value, including determining if the investments fit into their clients' portfolios," Mr Swanger said.

For further information, please contact:

Irene O'Brien
Head of PR & Communication
Macquarie Financial Services Group
Macquarie Funds Management Group
Tel: (612) 8232 3241
Mobile: (61) 417 260 309

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