Investment food for thought
Zurich Life also offers an index-linked fund, the Global Commodities Fund, which tracks the Goldman Sachs Commodities Index – Total Return (GSCI). This fund covers all the major commodities, including agriculture and livestock. It is down 7.3 per cent in the year to June 30th.
If you are prepared to pay extra for management charges, you could opt for an actively managed fund. Bear in mind that just because you pay more in fees doesn’t mean the fund will outperform the index.
Rabodirect offers funds from Swiss investment group Sustainable Asset Management, which specialises in sustainable investing. Its Agribusiness equity fund invests at least two-thirds of its total assets in global agricultural stocks or in stocks that profit from developments in the agricultural sector.
Its largest holding is Titan International, which produces tyres for farming equipment, while it also has significant allocations to chemical firm DuPont and fertiliser manufacturer Agrium. The fund is up almost 15 per cent in the year to August 21st, but this will be offset somewhat by entry and exit fees of 0.75 per cent, as well as an annual management fee of 1.5 per cent.
Another option is to find a play on food prices through investing in food companies. Picking a stock will depend, however, on whether the company is a seller or user of commodities. In this regard, though it has weathered the storm of rising food prices well to date, Kerry Group is at risk of an upward trend in commodities, while other stocks, such as Origin Enterprises, will benefit from them.
If you decide to take a punt on food prices rising, bear in mind that the world’s poorest are hit hardest by rising costs. Some argue that money pouring into investments in the sector and speculation are fuelling price hikes.
Earlier this month, Germany’s Commerzbank removed agricultural products from a commodity index fund after such accusations, while Deutsche Bank has indicated it will not release any new investment products based on agricultural commodities until it is sure of the impact on food prices.