External Resources on Alternative Investing and Farmland
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Below is a frequently updated list of articles and whitepapers from a variety of asset managers and investment research institutions on alternative investing as well as farmland, timberland, and other topics of interest.
Equity and Bond Correlations: Higher Than Assumed?
“Once in a while, new information comes along that turns conventional wisdom on its head and requires us to revise our established investing framework.”
Enterprising Investor, 30 January 2023
Inflation, Interest Rates, and Recession Risk: Farmland’s Resilience in the Face of Uncertainty
“Farmland investment performance has shown historical resilience in periods of economic disruption—how will it fare as risks of a near-term recession rise?”
Manulife Investment Management, 6 January 2023
“Current market turmoil alongside global commitments to transition to a low-carbon economy have highlighted requirements for investment portfolios that traditional asset classes alone cannot meet. We examine the financial and environmental benefits of natural capital investments, specifically timberland and farmland, that make them ideal assets to meet the needs of today’s institutional portfolios.”
Nuveen, 2 January 2023
The Power of Private Real Assets
“Private real assets are a powerful tool for institutional investors. Our latest research demonstrates private real assets’ potential to deliver uncorrelated returns, making them a key element for diversifying portfolio risk. They can also play a role in tackling some of the big issues investors currently face, particularly the increasingly inflationary environment and the growing demand for sustainable investments.”
Nuveen, January 2023
Resilience Through Real Assets
“Real assets are an essential element in a well-managed investment portfolio. Learn more about specialty assets and how they can be a solid investment that can help investors with these insights from Bank of America Private Bank.”
Bank of America Private Bank
Timber Investment: The New Branch of Real Assets
“There’s a strong case to be made for real assets in an inflationary environment. These long-lived physical assets have stable cash flows that often rise as inflation does. Real estate and transportation revenue streams, for example, come from leases that reset periodically. Timber offers these key opportunities—and more.“
J.P. Morgan, 7 September 2022
How Alternatives Can Address Your 60/40 Portfolio Blues
“Individual investors have long been told that a diversified portfolio of public equities and bonds is the key to a successful retirement plan. While that held true for a long time—especially in the past 14 years when expansionary monetary policy compressed the cost of capital and bolstered publicly traded risky assets—the mantra is now being challenged, as a number of secular shifts, including the end of the US monetary printing press that started in 2008, have the potential to render this public-oriented strategy less effective and possibly more risky.”
Apollo, July 2022
What Happens When Diversification Disappears?
“Changing inflation and policy regimes raise questions about the path ahead for the correlation between stocks and high-grade bonds. If correlations rise, it could pose a portfolio duration problem, sparking a hunt for new diversification sources—and likely intensifying the reallocation into illiquid assets."
Alliance Bernstein, 13 June 2022
“Our annual farmland primer provides an overview of this nascent asset class, as well as the farmland strategy that Nuveen employs through its farmland investment specialist, Westchester.”
The Relationship Between Inflation and Farmland Returns
“Historically, the conventional narrative around farmland as a financial asset is that the returns are positively correlated with inflation, have low or negative correlation with equities, and have positive portfolio benefits in well-diversified holdings due to the relative lack of response to short-term broad market movements. Farmland has also had high relative returns when evaluated in portfolio models, but is a complex asset to acquire, manage and dispose of due to thin markets and asset heterogeneity.”
TIAA Center for Farmland Research
“For the past two decades, the stock/bond correlation – a fundamental detriment of risk in traditional portfolios – has been consistently negative. However, this hasn’t always been the case, and a positive stock/bond correlation could reappear due to macroeconomic changes. In this article, we assess the broad implications this would have for investors and set out practical steps to prepare for such an outcome.”
AQR, Q2 2022
Regime Change: Enhancing the ‘Traditional’ Portfolio
“We believe that we are entering a new environment for investing, an environment where structural forces—in particular the changing structural relationship between stocks and bonds—demand a new approach to portfolio construction.”
KKR, May 2022
The above content is not intended to be a comparison between products, but is intended for general, educational and informational purposes only. Any performance noted is historical and there is no guarantee any trends will continue. All investing involves risks, including the loss of principal. Diversification does not guarantee a profit or protect against loss in a declining market. It is important for each investor to review their investment objectives, risk tolerance, tax liability and liquidity needs before investing. Investment vehicles have differences in fee structure, risk factors and objectives. Investing in alternatives may be considered speculative, and involves a high degree of risk and therefore is not suitable for all investors.
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