The new fund is a Luxemburg-based Sicav aiming for growth by investing in 30-80 stocks in the agriculture sector and related areas. It will be managed by Bryan Agbabian, who has 13 years experience of global equity investment, Agbabian is based in the San Francisco office of RCM, the specialist global equity company of Allianz Global Investors. He will make use of RCM’s Grassroots Research to help find the most attractive opportunities.
Grassroots Research is based on the idea that to achieve investment success, the fund manager needs to have a real understanding of the companies he or she is investing in. Its global network of over 300 researchers and reporters enable the company to find out what real people think about companies’ products and services. This can involve market research interviews, discussions with competitors and suppliers about the strengths and weaknesses of a company and analysis of newspapers and magazines to spot industry or company changes.
This provides RCM’s analysts and fund managers with an insight into the latest market trends to complement traditional research.
The new fund will invest across the agricultural sector, from businesses producing crops and livestock to companies processing, distributing and retailing food.
Allianz says the agriculture sector is in a period of growth and change, driven by two main forces. It says increasing affluence in emerging markets – not just China, but India, the Middle East and South America – is increasing demand for better quality food, such as meat and dairy produce. This places significant demand on the agriculture sector.
Another factor is increasing demand for biofuels, whether corn-based, US-produced fuel or Brazilian sugar-based ethanol. Climate change and the growing demand for organic food also make the sector interesting to Allianz from an investment viewpoint.
Commodities are attractive to investors and fund management groups as prices have soared on the back of the trends Allianz has outlined. Schroders has recently closed its popular agriculture fund as too many investors piled in and the company did not want the fund to be hampered by its size. However, Allianz may face competition from other new funds from Sarasin and London and Capital.