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Super funds should boost argi-investment: DomaCom
A successful crowd-funding campaign aimed at securing the Kidman Station for Australian investors, highlights the need to encourage superannuation funds to invest in argi-business.
DomaCom chief executive, Arthur Naoumidis, said the firm had secured commitments for $70 million from more than 4,500 investors, to bid for the iconic property, since it launched the campaign in December.
Naoumidis called on super funds, including self-managed superannuation funds (SMSFs) to boost their allocations to the sector by more than eight times their current holdings.
"Business is increasingly looking to rural land, just as foreign interests are, and we should be encouraging our $2.1 trillion superannuation industry (including the SMSF sector) to increase their exposure to a 2.5 per cent asset allocation from the current 0.3 per cent," he said.
"Although the value of agricultural land fluctuates in line with the highs and lows of climatic changes, such as drought, it attracts reasonable yields and enjoys capital gain.
"In our opinion, domestic investment into agricultural assets has the potential to be a significant game changer in the rural sector as the replacement of debt with long-term investment equity not only provides stability to rural enterprises but can substantially reduce the debt servicing load for the operating business.
"This has many benefits, including more robust business structures by reducing debt servicing, the ability to reinvest by the operator into operating assets such as cattle, feed expansion, equipment for improvement, thus enhancing the outcome of greater revenue to increase equity or for further expansion.
"Investment in our agricultural sector will encourage young people to stay on the land, particularly if equity capital can be crowd-funded through investment channels to give relief in the often never-ending cycle of debt that many on the land face while trying to increase productivity.
"Co-investment instead of debt leads to equity-based succession planning that is more attractive to next generation of owners and would encourage many young people to stay on the land."
Naoumidis added that there seemed to be disconnect between Australian fund managers and their overseas counterparts who clearly see a benefit in our agricultural industry.
AUTHOR
Nicholas O'Donoghue
Nicholas is a journalist for Money Management and Super Review. Nicholas has several years experience as a journalist, reporting and managing websites for various news publications covering the medical and pharmaceuticals sector.
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TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
90.28 3 y p.a(%)
2
GAM LSA Private Shares AU I
37.08 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.44 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.12 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
28.28 3 y p.a(%)
