Market Outlook and Fund Positioning
– In spite of ongoing share [change to ‘stock’] market volatility due to macro - economic uncertainty and central bank intervention in financial markets, the long - term fundamentals supporting the agribusiness sector remain compelling. Global population growth supports long - term food demand and improving wealth in emerging regions is resulting in not only increasing demand for food but also more grain - intensive protein.
– Weather conditions continue to affect the prices of individual commodities. This can have an important influence on sentiment towards the share prices of companies in the soft commodity sector. We do not forecast commodity prices and continue to select quality stocks with good earnings growth profiles and sound balance sheets.
– The Fund maintains a high level of diversification by geography, commodity type, within the agricultural supply chain and company size. Around 55 stocks are currently held in the portfolio.
– Our research effort continues to be based on a high level of contact with agribusiness companies globally. There is no substitute for visiting companies’ operations first - hand in order to assess the economics of each asset and to better understand the everyday challenges that are faced.
– Merger and acquisition activity continues to be a feature of the sector, with ADM making its final and agreed offer for Australia’s Graincorp at the end of April and China’s Shuanghi International’s takeover offer for S mithfield Foods in May. We also continue to see the expansion of the sector with new listings and capital raisings to fund growth plans
For further details (providing a more detailed review on the fund and the sector as a whole) please refer to the following PDF-document:
