Super ignoring benefits of agriculture investment, says AAG
Australian superannuation funds could have been buffered from the onslaught of the global financial crisis if they had invested more in Australian agriculture, according to the Australian Agribusiness Group (AAG).
According to AAG research, Australian super funds have invested less than 0.01 per cent in Australian agriculture, while international pensions have recognised its value proposition and invested three times more at over $1.5 billion.
AAG executive chairman Marcus Elgin said the super contributions losses of 27 per cent during the global financial crisis would have been smaller if super funds had invested more in the top 25 per cent of agriculture.
“Superannuation funds should acknowledge agriculture acts as a ‘shock absorber’ during difficult times because of its negative correlation with major asset classes such as Australian and international shares, its low volatility and its slower investment cycle,” said Elgin.
The AAG’s research paper, Does Agriculture Improve Portfolio Performance, states that although the top 25 per cent of Australian agriculture has provided returns of 11.2 per cent over the last 12 years with only one third of the volatility of the All Ords, super funds have not yet acknowledged that it is a viable investment option.
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