Farmland is not correlated to financial assets and outperforms over most periods, but especially periods of inflation. They’re not making any more of it and farmland becomes more valuable each year.” In their latest newsletter @CAASA shares some important information about retail investors and alternative investments. AGinvest’s, Anthony Faiella speaks about Farmland Investing and the issue of Liquidity.
Overview
Alternatives have long been thought to be the sole province of institutional investors. Securities traded by public markets are well-understood, liquid, and priced frequently and so they are more well-understood, and thought to be more secure. Alternatives – whether they be an alternative asset class like private equity or private debt, or the use of alternative strategies like long-short are less liquid, are less understood, and often require a significant amount of due diligence. Thus, the thinking goes, they are best left to institutional investors whose large balance sheets and, frequently, predictable cash flows allow them to make illiquid investments in the pursuit of large and uncorrelated yields. But why should retail investors leave opportunity on the table? The public markets, after all, only allow investment in securities that are listed on an exchange. The world of private assets, conversely, is much broader and the number of opportunities for investment much higher. Increasingly, retail investors of every level of sophistication are looking to alternatives to seize opportunities that public markets do not afford, to smooth out the volatility of their portfolios, and ensure that they’re getting true diversification. “When you look at private investments, you start to see reduced correlation to their public equivalents and better returns over the long run. What I say is: if you’re looking to smooth out the ride for the investor over the long run, a healthy allocation to alternative investments is good. This is because it eliminates irrational investor behaviour and charged investment decisions through illiquidity. You cannot read a headline or a tweet, then run to the keyboard and hit sell. This asset class doesn’t work like that.”
Travis Forman, Portfolio Manager at Harbourfront Wealth
Continue through the full PDF newsletter here: CAASA-Path-Through-Volatility-Retail-Investors-and-Alternative-Investments-2023