Baring global agriculture aims for growth by investing in companies that derive the majority of their earnings from agriculture or those that have the potential to benefit from this theme. The company believes that strong demand from emerging and developed economies combined with constraints in supply will continue to push up commodity prices, despite recent falls of around 50 per cent.
Lead fund manager Jonathan Blake, who has 11 years’ investment experience will invest across a range of areas such as the supply of fertilisers and agrichemicals, farming and delivery to distributors, processors and marketers.
Blake is able to draw on his experience at the helm of the Baring global resources fund, which was launched in 1994 and has a proportion invested in soft commodities.
The new fund will have 40 to 70 holdings, selected through a growth at a reasonable price strategy. Blake will look for companies with growth prospects that are not yet recognised by the market and may invest in areas such as forestry, pulp & paper and water & fishing if suitable opportunities are found.
The long-term investment case for agricultural commodities may be sound and the fund manager does not expect the global economic downturn to lead to a decline in the demand for soft commodities. However, investors should be prepared for short-term volatility as areas such as farming machinery have been affected by the recessionary environment.