in the Global AgFood Future
The AgFood Opportunities Fund is an alternative and defensive investment fund based in Melbourne, Australia. The fund aims to provide shareholders with a 8-10% p.a. returns by prudently allocating capital, technology, and management support in those critical areas across supply chains with a view to unlocking commercial potential and support Australasian agribusinesses meet global food export demand of 3-6%p.a.
Agriculture is one of the oldest asset classes in the world and is the fundamental support beam of the global economy. Investing in the food and agribusiness sectors requires an intricate level of understanding of crops, livestock, geographies, and complex value chains that encompass inputs, production, processing, and retailing.
The sector has historically been less sensitive to economic downturns and is considered to be an essential service to produce essential goods. Hence, the sector exhibits a comparatively lower correlation to the overall stock market but is positively correlated to inflation making the asset class a good inflation hedge.
The AgFood Fund team has a wide range of experience spanning private equity, listed equity, operations, and consulting that brings a plethora of perspectives to the table. This enables us to identify mispriced opportunities and take action in a timely manner to maximise return over the three-year time horizon.
Historical Return Profile
The AgFood Fund's investments are bias towards the production, processing, and retailing of essential goods that are generally found under the consumer staples umbrella with growing exposure to agtech, plant-based biotech, and natural capital. Accordingly, the fund recorded an 11.2% return over the previous 12-months. Comparatively, the ASX Consumer Staples Index returned 9.5% and the ASX 200 returning 21.9%. Longer-term observations of annualised returns witnessed the ASX Consumer Staples Index record a 9.6%pa return (5-year annualised) relative to the ASX 200's 6.1%pa. However, as the world begins to reopen albeit, steadily, investors have shifted from the defensive Covid-19 position of 2020 to the hard commodity/tech growth of 2021 as reflected in the ASX 200 1-year return in the table below.
Prices of agricultural commodities have risen significantly over the duration of the pandemic (see S&P GSCI line chart below). Hiked commodity prices have stemmed from disrupted supply chains (transitory), extreme climate events in the northern hemipshere, and increased demand for agricultural imports from countries like China that has poised Australian agribusinesses to increase its toehold in global agricultural commodity markets. The AgFood Fund aims to provide growth capital solutions for emerging and established agribusiness leaders in both public and private markets and support the broader Australasian agribusiness sector.