Agribusiness: missing the wood for the trees
There is more to the agribusiness universe than tax-effective managed investment schemes, according to Zenith senior investment partner Dugald Higgins.
He pointed to some of the funds being offered by Rural Funds Management (RFM) as a good example.
"Their almond projects are the only tax-effective vehicles they've ever done. They won't ever do them again. By far the majority of their vehicles throughout their history have not been tax-effective," Higgins said.
RFM currently offers a land and infrastructure fund that generates returns from lease payments, along with Stockbank, which involves the trading of livestock via a share-farming agreement, said Higgins.
When it comes to tax-effective managed investment schemes (MISs), Higgins said there are currently three that are open to 'mum and dad' investors: the AACL 2012 Grain co-production project, TFS Sandalwood 2012, and the Premium African Mahogany 2012 project.
Of those, Zenith is currently recommending the TFS Sandalwood project - and has recommended the AACL project in past years, said Higgins.
The financial adviser interest in MISs is unsurprisingly poor, given the number of clients who were burned by Great Southern and Timbercorp, he said.
"But some advisers recognise that if you are discerning and you have the right type of client - with the right requirements and risk profile - there is a case to be put that some form of limited exposure may be made to investments like this," Higgins said.
The problem with MISs in the past has been that investors have misinterpreted their nature, said Higgins: things like long-term forestry projects are speculative, not investments per se.
"It's like investing in gold. You don't invest in gold, you speculate in gold - because it doesn't pay you anything in between. People can very easily miss the distinction between those and how such sort of things should act in your portfolio," said Higgins.
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