Schroders is set to launch an Agricultural Land fund in September, designed to offer investors exposure to the long-term returns of agricultural land.
The Guernsey-domiciled closed-ended investment trust will give investors exposure to global agricultural land and land-related industries through investment in private equity companies, farm management businesses and related funds.
Approximately a quarter of the fund will invest in agricultural land-related equities and commodities.
The target net return of the fund, managed by Mark Bridgeman, will be 10-15% a year over the next five to 10-year investment period, according to Schroders.
Bridgeman will be supported by an investment committee made up of Schroders’ property, private equity and agricultural specialists, plus external agricultural practitioners and investment advisers.
He said: “The demand on agricultural land is under a lot of pressure. The world’s population is forecast to grow by 44% over the next 40 years. With improved diets, food consumption is set to double. As GDP per capita increases, so does the consumption of meat, which demands far higher amounts of grain.”
However, Bridgeman warns that while food consumption is increasing, productivity improvements have slowed. He believes there has to be a radical change in the way land is farmed and managed, as the world adapts to the challenges of feeding itself.
“The Schroder Agricultural Land fund is designed to benefit from this rapidly changing landscape by investing in companies and private equity funds that will generate capital and income from the efficient management of land,” he said.
William Hill, head of Schroder Property, said: “Investing in agricultural land at a global level makes sense. It has significant diversification benefits for investors with traditional commercial portfolios. The drivers behind value generation are clearly different and there is a strong long-term growth story to build on.”
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