Since there is so much negative and nervous sentiment in recent weeks, I thought it would be fun to discuss a great alternative investment, one that is getting talked about a lot. Farmland – in particular, Saskatchewan Canada farmland. Why Sask? See reasons from this farmland investment group.
Full disclosure: I come from a farming background and currently oversee investment in a private farming operation with a group of investors. Why? For us its 3 core reasons: long term view on land as a result of global food demand, minimal risk and good upside (long call option), and non-correlation. Given this is the first post of this nature, I will focus on one key aspect: non-correlation (is also discussed in the monthly commentary of Auspice Capital). First, and remember I am biased here being involved in both Managed Futures/CTA funds and Farmland, take a look at the this correlation chart of various Alt investments to the S&P.
Do you understand now why Farmland and CTA are my personal focus? It makes a lot of sense. These are two of the lowest correlated strategies to the “traditional” portfolio. Also note the red bar is “Hedge funds” of which CTA is distinctly different from. Please don’t CTA in that camp.
As a starting point, taker a look at the landmark paper by Marvin Painter. I will be hitting you with more comments on this topic in the near future. For those who know know me, I am deeply passionate about both the CTA/Managed Future space, Farming, and well…Cars – that’s what this blog is about…I look forward to thoughts and opinions.