Michael Young, CFA, Director of Sustainable Capital Luxembourg S.A., recently spoke at the /Sustainable and Ethical Investment Conference/in London on the topic "Agricultural
Investing in Frontier Markets".
This interesting event in central London was well attended by members of
the investment and investment advice community with delegates coming
from across the UK, North America and Europe, providing a useful
dialogue between companies creating & managing funds and those investing
& recommending investments. The focus was less on actual "product" and
more on the concept, strategy and reasoning behind their creation and
how these investment classes are being appreciated by a wider audience
for their unique characteristics. It was generally recognised that the
assets, and therefore also the returns, of some funds in this sector are
not correlated with regular stocks and bonds, and again how this has
advantages to certain types of investor.
Of course the advantages to the wider society of ethical and sustainable
funds were also touched upon, but this was not a stakeholder meeting it
was a gathering of financially tuned minds. The audience was treated to
spreadsheets and graphs illustrating both returns and the measurement of
risk. Due diligence was a phrase mentioned by many speakers, it was
apparent that the professionalism of investment teams and the sound
management of teams on the ground running these sustainable projects is
key to the overall success of this sector.
"We believe that you can plan for portfolio success when you deal across
a number of diverse projects in different geographical areas" stated
Michael Young. "Land prices in developed markets are severely impacting
on remuneration rates...there is inadequate compensation for the lack
of liquidity. This is a significant factor in our strategic approach to
sustainable agricultural projects in frontier markets".
He went on to explain how Sustainable Capital was not just trusting to
the "combined luck" of due diligence, a skilled investment team & strong
project management, but would also be bringing in state of the art
technology to help. Using sophisticated and robust remote access
measurement and data collection instruments, communication tools and
smart software from a Singapore based company BioMachines. These systems
"allow you to remotely check the health of your plantation" clarified
Young "in real time ...from your desk in London, Singapore or wherever.
In fact I can check the health on my plantations before the competition
have even got to the airport on the way to check their own! It is also
cheaper for me to install this technology than it is for my competition
to send an independent consultant to their managed sites for a weekly
visit, something they may well repeat several times during the year."