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Published in 2014, our Insight Report highlights the issues that will lead investors to shift greater attention and more funds into Alternative Assets, specifically those providing that most primal of needs, food. By way of context, we identify and discuss a range of issues, including recent US legislation (FATCA, HIRE), high levels of government and consumer debt, adverse demographics and still weak global macro-economic indicators which together will result in a more difficult investment climate for traditional assets.
Smart investors are already readjusting and diversifying their portfolios to take into account an expected slowdown in mainstream asset class performance, with the share of alternatives in global Assets Under Management (AUM) doubling from 7.7% to 14.3% between 2005 and 2011. The attractiveness of agricultural products as an investment vehicle are laid out. We describe the present environment as being ‘a perfect storm’, with rising food prices concurrent with available farmland world-wide disappearing. Rapid population growth in Asia will continue until mid-century and the need for higher levels of protein rich food will also exert a major influence. Liquid’s Coconut and Neem investments, based in Brazil (set to become a top 5 global economy by 2015 and the world’s largest food exporter), will tap into the need for ethically grown foodstuffs and increasing uses across a wide range of sectors, including industry, utilities, transport and healthcare. Investment headwinds are set to increase in 2014; read our topical report for independent analysis of mainstream investment issues and our long-term niche solution offering superior returns.
- Food – It’s a primal need, not a luxury. We aren’t growing enough of the right foods in the right places. As a result prices are rising. There is no more secure investment than investing in the essential need for foodstuffs for human consumption.
- They are perfect instruments for diversification. By utilizing ‘Liquid Investment Theory’, Liquid’s clients benefit from persistently rising demand for the company’s products while being protected by the diverse strata of uses, which means by asset class, commodity, currency, geopolitically and product range.
- Brazil is the largest and richest country in South America – it will be the single largest grower of food for the world by 2020.
- Globally the amount of available farmland is getting smaller – falling water tables, climate change and desertification will combine to push up arable land prices elsewhere.
- Investing in physical commodities can be an attractive natural hedge against volatility and low visibility in bond and equity markets.
- Only 1% of the world’s agriculture is fully organic, yet both coconuts and neem provide a wide range of natural foodstuffs and fertilizers to satisfy this growing market.
- Medical research is currently being undertaken to examine and where appropriate bring to the market coconut oil or neem based medical products. Coconut oil based products are being used against Alzheimer’s, dementia, multiple sclerosis, diabetes, Parkinson’s and autism, while Neem has uses against diabetes, cardiovascular disorders and malaria.
- Liquid’s partner in Brazil, Cohibra are the foremost experts in their field, undertaking research on behalf of the Brazilian Govt. and are pioneers of modern agriculture in the country.
- Alternative assets are becoming mainstream. Exposure to the sector will continue to rise from 14% of institutional assets under management in 2011 to 25% by the end of 2013.
- A top 5 global recipient of Foreign Direct Investment, the soccer World Cup in 2014 and the Olympics 2 years later will be focal points for intensive infrastructure investment country-wide.
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