Aim: Growth by investing in agriculture and its associated sectors through equities, commodities and land
Minimum investment: Lump sum £1,000
Investment split: 100% in agricultural and related equities, commodities and land
Isa link: Yes
Charges: Initial up to 5%, annual 1.5%, performance fee 15%
Commission: Initial 3%, renewal 0.5%
Tel: 020 7038 7002
Sarasin agrisar aims for growth by investing in a global multi-asset portfolio of investments in agriculture and associated sectors.
Discussing the ways in which this product is good for IFAs and their clients Morgans Independent Advisers director Martin Dilke-Wing says: “It provides another outlet for people wanting to get into the soft commodities area that perhaps do not have access to some of the more esoteric and high entry requirement funds that currently offer this type of investment opportunity.”
Dilke-Wing points out that the fund is managed by Sarasin, which he feels has had a mixed press over recent years in terms of the overall performance of its flagship funds. However, it appears to have ridden out the worst of it. “For example, Sarasin equisar is showing top quartile performance in the Global Growth sector over pretty much all time periods. The remuneration is standard and the charges appear to be predictable, although the high watermark performance fee may be off-putting to some investors.”
In Dilke-Wing’s view, it can often be useful to provide a degree of diversification to a client’s equity-based portfolio that goes outside the traditional areas, into a sector that is highly topical. “It may be that Sarasin has also capitalised effectively on the fact that it has already exploited its expertise in this area successfully in other portfolios. It may have earned the right to claim that it is ahead of the pack, or it may simply have profited from getting in there among the first of the major players.”
Turning to the potential downsides of the product Dilke-Wing says: “The only thing not to like about this fund, apart from the performance related fee, is the fact that it is by definition extremely sector specific. In the event that soft commodities don’t perform, there is pretty much nowhere to hide.”
The only real mainstream competition of which Dilke-Wing is aware is provided by Schroders, although he notes that various structured products have been launched that are linked to soft commodity indices “There are a number of multi-manager portfolios that provide access to the Schroder fund, mainly as a fringe play to provide a useful kicker to returns without impacting too dramatically if it goes wrong.
“Interestingly Insinger de Beaufort announced this week that it was pulling its exposure to the Schroder fund, commenting that it may have sold early but a 30 per cent return in this environment over five months is one it decided to book.”
Dilke-Wing expects there will be a number of competitors jumping on to the bandwagon in the future.
Summing up Dilke-Wing says: “The investment story would appear to be certainly persuasive, if not completely compelling, but there is also the feeling that only one side of the story is being told. If you read the broadsheets, every week there are an equal number of doom mongers regarding reasons why the explosion in prices in this sector may already have peaked, and in an echo of all the new launch funds piling into commercial property a year ago, the fear remains that you may have missed the boat.”
Dilke-Wing suspects that the arguments for this pessimism are nowhere near as clear in this scenario and his gut reaction is that as a non-correlated asset class, there may still be strong reasons for using this fund as a valuable diversifier. “Having said that, I wouldn’t be entrusting any aged relatives’ emergency funds to it in their entirety, but as a non-mainstream Sipp or portfolio investment for those with a high degree of tolerance to the fact that it could show significant losses as well as gains, it provides a potentially valuable outlet,” he says.
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average