A new Farming Index, which will focus largely on Emerging Markets and global farming, has been launched by Indxis, an independent provider of bespoke indices, and GAIA Capital Advisors, a Geneva based fund manager and investment advisor specialising in global natural and agricultural investing.
Investors seeking to diversify investments by adding the agriculture sector to their portfolios should be interested in the attractive fundamentals and prospective returns available in this space. Over three years, the GAIA Farming Index has an annualised return of 20.29%, outperforming such references as MSCI EM small & mid cap by 8.56%, according to back-tested data. It has also outperformed agri index peers, including the Market Vectors Agribusiness ETF (MOO) and the Claymore Global Agriculture ETF (COW).
The new index will form the basis of an ETF or other structured product and will offer investors exposure to farming companies with that are attractive due to: exposure to millions of hectares of agri land, market liquidity, high growth profiles, and low valuations. Indxis will independently administer and update the calculations and pricing of the index on a daily basis, while GAIA will manage the index according to a clear set of criteria and conditions.
Alan Price, Sales Director of Indxis, says: “Having worked closely with GAIA Capital Advisors in developing this product, we are delighted to announce its official launch. This is an area of the global agriculture sector that has enormous potential, yet remains relatively untapped considering its opportunities. We look forward to seeing how this index progresses and the future ideas and products that might be formed out of it.”
The new GAIA Farming index is focused globally on companies owning and operating agri land and often having significant vertical integration (to capture more of the value chain). This is where the best combination of low valuations, high growth and solid fundamentals are seen. The index includes all production segments, such as meat, grains, edible oils, dairy, fish, diversified farming and other plantations, and is well diversified geographically to East Europe, Asia, LatAm, Africa, and other regions. The overwhelming theme of the index is food production to “feed the world” and GAIA’s proprietary selection methodology does indeed consider such issues as food vs. fuel and sustainable and responsible development.
Opportunities in global farm production are often overlooked as the sub-sector is significantly undercapitalised versus other agri sub-sectors and it is in this space that GAIA Capital specialises in uncovering value and opportunity for investors.
Coast Sullenger, Managing Director of GAIA Capital Advisors, says: “Having a recognised partner such as Indxis independently calculating our index has been vital in the launch of this product. It was important for us to work with an established provider but also one who understands the markets we invest in and who has a dynamic process to operate in this new fast growing space.”
