The Role of Agribusiness Assets in Investment Portfolios
Investment in agribusiness assets has grown significantly in recent years. The question of interest is whether including agribusiness assets in investment portfolios provide benefits. The effects of diversification by including agribusiness assets in two investment portfolios, a mixed asset portfolio and a diversified share portfolio was investigated using Markowitz’s (1952) Modern Portfolio Theory (MPT) of mean-variance optimization.
Farm forestry could drive biofuel for transport
best contribute to fighting climate change in Australia by
mass planting of trees on farm land to provide biofuels for
transport, according to a researcher.
Market Volatility – Frequently Asked Questions
The recent sharp negative performance of equity markets
around the world and the questionable financial viability of
several companies, has many investors concerned about their
At times of such market uncertainty and negative sentiment,
people often think the worst. The following information is
aimed to dispel some myths and to provide an update in
relation to client investments.
From 12 December 2007, the ‘Know Your
Client’ (KYC) requirements of the Anti-Money Laundering
and Counter Terrorism Financing Act (AML/CTF
Act) require designated service providers (which includes
financial advisers and product providers) to collect and
verify clients’ identification (ID) information.
The purpose of the AML/CTF
Act is to monitor financial transactions and to capture
client information in a way that will help detect and
prevent money laundering and terrorism financing.
At this stage there is no consistent policy
in place for the fund management industry. Some fund
managers may not accept any new business without the
investor's identity being verified, whilst others are using
a transition period to implement the new regulations. As a
result additional identification documents may need to be
provided with investment applications. Investors should
check the instructions for completing application forms and
any identity document requirements provided in the product
The complete AML/CTF form for individuals can be
ASIC Managed Funds Calculator
Compare different managed funds and the impact of management costs on your rates of return.
The calculator works for most types of managed funds. It does not work for insurance bonds, friendly society bonds, similar ‘tax paid’ investments, or retirement income stream products.
Investment Goal Calculator
This calculator helps to estimate whether or not you are on track to reaching your investment goal, taking into account your current savings plan and required investment period.
Does Agribusiness Improve Portfolio Performance?
An analysis and discussion of the impact of agribusiness in a portfolio by Australian Agribusiness Group
Investors in Australia have traditionally overlooked
and underinvested in agribusiness because of
perceptions of high risk and poor returns. This
paper investigates these perceptions and
demonstrates that quite the reverse is true.
26 years of data for Australian shares, Australian
cash, Australian 10-year bonds, Australian listed
property trusts, international shares and
international bonds were compared against
agribusiness as an investment.
The Top 25% of agribusiness can produce returns
better than the All Ordinaries.
Returns from Top Agribusiness is substantially less
volatile than the All Ordinaries.
Agribusiness is negatively correlated to other asset
The addition of agribusiness to a portfolio can
increase returns and substantially reduce
Well managed agribusiness is a sensible choice when considering diversification for a portfolio.
How much super is enough
What kind of income would you like when you retire? Do
you know how much super will provide that income? Will
employer contributions be enough? Should you contribute more
Mortgage Funds - the income alternative
The aim of any income fund is to provide regular earnings
while protecting capital. Cash funds have been a popular
income stream but this guide shows how mortgage funds are
becoming increasingly popular to attain regular returns on
The perils of market timing
investments around –or diversifying—is one of the best ways
of reducing investment risk and improving your chances of
achieving a more consistent investment return.
Why you shouldn't chase last year's returns
We all want to pick a winner with our
investments but chasing last year’s performance isn’t the
way to go about it. Learn how to avoid common hazards and
helpful alternative strategies.
The real value of investing internationally
Investing in international shares can provide
greater diversification, more exciting investment
opportunities and stronger long-term performance than
investing only in the Australian sharemarket.
Over nine million Australians have discovered
the benefits of managed investments –one of the world’s
fastest growing investment categories. Learn more about them
in this guide.
Investing for low risk income
Not all investments carry the same risk
levels. Learn about typically stable investments like cash
management funds, mortgage funds, term funds and fixed
interest funds here.
Residential investment property or listed property trust?
Australian investors are passionate about
property as investments but tend to focus primarily on
residential property. See the alternatives here.
Managed Investment Scheme
A type of investment vehicle that pools the assets of multiple investors into a single vehicle with a common investment objective and strategy. The investor’s interests.....
for more on this and other terms.
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Wealth Creation Strategies
Your Investor Profile
: Understanding Investor Risk Profiles
Your choice of fund will also be affected by your investor profile, which is a combination of factors - your investment experience, your attitude to volatility, and your investment time frame.
: What you need to know
How to get started
Understanding and explaining Options, Warrants & Futures
Interest Rate Market
Exchange Traded Funds
Find out share prices, company information and up coming
The above information is supplied by the Australian Stock
The Financial Literacy Foundation has been established by
the Australian Government to give all Australians the
opportunity to better manage their money. The Foundation was
launched on 6 June 2005.
The Understanding Money website offers a wide range of financial literacy information for people who want to find out more about managing their money.
It has tools such as a budget planner, topics on money related issues and links to other useful websites.
What is a syndicated loan?A syndicated loan is a secured loan to a company which emanates from a banking
or financial institution. Syndicated loans offer a floating rate of interest that is tied to
a benchmark and is reset periodically (usually every three months).
In the US and Europe financial institutions remove loans from their balance sheets,
primarily for capital adequacy reasons (unlike Australia where the banks often seek
to maintain full relationships with their clients). This enables investors to participate
in a syndicate of company loans. The loans are structured, arranged, and typically
managed by one or more commercial or investment banks known as arrangers. The
arranger raises investor dollars for a borrower in need of finance and is paid a fee by
the borrower. As part of the loan syndicate, investors get full access to the company’s
financial records. This can give investors more information regarding the investment
target than is usually available to high yield bond investors, providing an extra
degree of comfort.
What are hedge funds?
Defining hedge funds can be difficult as there are many
types of hedge funds that differ significantly from one
another in terms of their investment objective, style,
performance and risk characteristics. Essentially hedge fund
managers invest in similar asset classes to those of
traditional managers, but incorporate different skill based
strategies which may include the following:
||Short selling a security in the expectation of it falling in value and buying it back
for a lower price in the future
Use of leverage (or borrowing) to
finance an investment
||Use of derivatives such as options and futures, which may have similar effects to
The use of these strategies allows
alternative managers to add value where traditional managers
cannot. This is because traditional managers are typically
not permitted to use short selling or to leverage their
portfolios. Using alternative strategies enables hedge funds
to target positive absolute returns, irrespective of a
Other distinguishing features of hedge funds can include
||Incentive based remuneration whereby a
performance fee is charged in addition
to the management fee if
the manager exceeds a certain level of outperformance
||Fund managers invest a significant
portion of their own wealth in the fund aligning
their interests with that
||Limited liquidity that results in set
time frames for investment or redemption of
monies, eg. monthly or
What are hybrids?
Hybrids are securities that may have aspects of both equity and fixed interest investments,
offering a fixed or floating return over a set time frame with the option of converting to
shares at maturity. These hybrids allow investors the opportunity to participate in the
appreciation of the underlying shares, with the protection of receiving regular income.
Consider an example where $10,000 is invested in a hybrid security which pays
income semi annually at a fixed rate of 6%pa for three years. The investor would
receive $300 every six months ($600pa) until maturity, at which time the investor
could choose to convert their investment into shares, rollover their investment (ie. stay
invested in the hybrid) or receive their $10,000 back in cash.
Agribusiness Industry fact sheets (Timbercorp)
THE POPULARITY OF ALMONDS
The almond is a versatile nut, able to be consumed raw or
processed in a variety of ways. In developed countries,
including Australia, it is considered an important part of a
healthy diet and in developing countries it is valued as an
attractive source of protein. In some countries it has
cultural significance and is associated with ceremonies and
THE POPULARITY OF AVOCADOS
Avocados are used predominantly as a fresh fruit. However
avocados also have a wide variety of uses as a manufactured
product, such as sushi and as the base ingredient for the
much loved food product, guacamole. Avocado oil is also used
in cosmetics and due to its high nutrient content has become
a popular cooking oil and salad dressing. Avocados are No.1
in the “Top 10 Foods that are good for your heart” being
sodium and cholesterol free. They have 60% more potassium
than bananas and recent studies have shown that consumption
of avocados increases your body’s ability to absorb
heart-healthy and cancer fighting nutrients that are found
in other vegetables.
THE PAPERLESS SOCIETY – AN URBAN MYTH
It was once thought that with the introduction of
technologies such as the Internet and email, Australia would
soon become a paperless society. This could not have been
further from the truth. Studies have shown that the
introduction of technology into a country dramatically
increases the use of paper. Countries such as China and
India which are experiencing strong growth in GDP,
population, income and literacy levels, are seeing dramatic
increases in paper consumption.
THE POPULARITY OF MANGOES
The mango is the second largest tropical fruit crop in the
world, second only to bananas. This fruit, which is
typically eaten fresh, can also be used for a variety of
purposes that include canned fruit, juices, jellies,
dehydrating and pulps that may be used in iced confectionery
and yoghurts. Mangoes are even used in their un-ripened form
for pickles and chutney.
THE POPULARITY OF OLIVE OIL
The demand for olive oil has grown significantly in recent
years, aided by the popularity of Mediterranean-style
cuisine, in which olive oil is an important ingredient, and
an increasing awareness of the health benefits of olive oil.
Olive oil is an important part of a healthy diet. It
contains a variety of valuable anti-oxidants that protect
against cancers and its consumption can help reduce the
level of total blood cholesterol. Olive oil is also
beneficial for the stomach, hepato-bilary system, pancreas
and intestines. It has anti-ageing properties and helps with
osteoporosis, cognitive function and skin damage. Although
it is mainly used in cooking, it is also consumed as a dip
and as a salad dressing. Olive oil is also used in the
manufacture of cosmetics. Careful marketing over recent
times have raised the awareness of the health benefits of
olive oil and dispelled a few mis-conceptions. For instance,
the term ‘extra-light’ olive oil does not refer to the fat
content of the oil, merely the taste and colour.
Mirroring benchmarks…are we doomed to make these mistakes again?
Zurich Investments, the funds management business of Zurich
Australia, has released a white paper on the pitfalls of
fund managers mimicking global benchmarks and how thematic
investing fits into an international share portfolio.
Payment of CGT Liabilities
Jim’s portfolio of managed funds has doubled from $175,000 to $350,000 since 2003 and he is concerned that “such gains cannot continue”.
Jim Smith 45 years Salary of $120,000 per annum, plus
superannuation of 9% Home value: $600,000 Mortgage of
$50,000 Monthly repayments of $1,000 with the debt expected
to be repaid < 7 years. Superannuation of $300,000 Managed
funds of $375,000
Because Jim’s portfolio of managed funds has doubled from
$175,000 to $350,000 since 2003 and he is concerned that
“such gains cannot continue” he has indicated to you that he
wants to reduce his exposure to the Australian share market
and wants to “take some of the profits made in the last 3
years" and is still “happy to leave some in for the next
Jim is best classified as an astute investor, cautious,
but not conservative.
Want to learn how Jim invested next?
Budget tax changes:
A strategic timing opportunity for agribusiness!
The May budget this year has created strategic timing opportunities for Australian investors to make the most of significant tax changes that will be introduced on 01 July 2006.
The most profound effect will be for tax payers in the $95,000 or more categories who currently pay some 47% tax (plus Medicare) on every dollar over the threshold. From 01 July an income earner will have to earn an additional 58% MORE income to be included in the top tax bracket, which in itself has been reduced to 45% and starts at the massive $150,001.
The Australian Financial Review reported that just ‘the Top 2% of wage earners, those who earn over $150,000 a year, will pay the new top marginal rate of 45c in every dollar'.
The implication for potential agribusiness growers is to optimise their investment positions prior to 30 June to make good use of the available tax deductions afforded to Growers in the various projects prior to 30 June as when the income is received in future years the Grower most likely will be in a lower tax bracket, simply due to legislative change!
The Australian Agribusiness Group (AAG) has released
its “top 10 golden rules” of agribusiness to consider before
making any investment decisions.