Farmland in a portfolio

Our permanent effort is to reduce the volatility of our investments. One of the best ways to do it is by adding gold and fine art, and REITs. We have not talk much about farmland. Clearly this asset class has behaved amazingly well during the last years. Famous gurus such as Rogers or Soros are strongly betting on farmland, but they have the means... Should we?

First of all, adding farmland to an international portfolio makes a lot of sense. Basically it has low or even negative correlation with the rest of asset classes including normal REITs. You can read a related interesting paper here.

Second, for most investors, developing a well-diversified portfolio of direct investments is very complex and time-consuming. Investing in farmland through a farmland investment manager can provide the benefits of diversification, experience, and scale. Closed-end funds have a fixed term with some potential for extension, but are generally illiquid for the term. As with private equity, fund terms can vary widely. Open-ended funds and publicly-traded F-REITs provide more liquidity, but valuation at entry and exit can be an issue in open-ended funds, and the performance of public F-REITs can be influenced by capital market trends and other factors apart from the underlying farmland investment. Co- investments and managed accounts often require a larger minimum investment, but offer investors a greater measure of control.

Some options are:

Australia: Rural Fund Management (several investment options, ticker RFF)

New Zealand: Rural Equities (difficult to buy, only through unlisted.co.nz), Franklin Rural Management.

Bulgaria: Advance Terrafund (ticker 6A6).

US: Farmland Partners (ticker FPI), Gladstone Management (ticker LAND).

Canada: AG Capita (funds), Bonnefield (only for Canadian residents).