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Anissa Cavallo |
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Managing Director |
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Dear Ellen,
As we ready ourselves for the end of the financial year there is one topic we like to touch on and no it is not the looming budget breakdown, rather agribusiness and tax effective investments. With that in mind we have asked for input in this edition of Bout Up from the likes of Industry heavy weight Shane Kelly, noted Agribusiness sceptic Tom Elliott and Langton Clarke a partner at McMahon Clarke Legal who gives us an update on how the laws have changed in the managed investment sector. And finally I have written an article discussing that big is not necessarily better!
We hope that you find this information interesting and welcome any feedback. |
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Shane Kelly |
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Managing Director Adviser Edge |
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| USING AGRIBUSINESS MIS AS A DIVERSIFIER |
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Holding Managed Investment Schemes (MIS) as part of an investment portfolio is another source of overall portfolio diversification. MIS is useful as it adds agricultural diversification. Due to the low to negative correlation of agribusiness and forestry to mainstream asset classes, including a mix of agricultural MIS, allows investors to take advantage of individual project benefits, plus also spreads the risk of each underlying investment within the set. A well selected range of investments that includes agricultural MIS may also reduce the risk of returns variability, while maintaining a target average return.
READ MORE
Adviser Edge, BDO Kendalls and BDM Direct are about to launch their proprietary agribusiness portfolio contsruction tool, AgriBlend. For a sneak preview please click here:
www.agriblend.com.au |
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| AGRIBUSINESS IS NOT A DIRTY WORD |
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Agribusiness is still a dirty word for some, add MIS and it evolves into the “enemy of the state” (almost up there with some of the Underbelly characters). The recent issues faced by household names like Timbercorp and Great Southern have done little to mitigate the perception of Agribusiness as risky. That’s a shame.
It’s a shame because retail investors stand to miss out on some investment opportunities that have a low correlation to equity markets, and yes, offer the benefit of a meaningful tax deduction. There are few investments in Australia that offer such efficient tax effectiveness. Negative gearing, even at phenomenal interest rates, only offer deductions of less (usually) than the applicable interest rate (See Figure 1).
READ MORE |
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Langton Clarke |
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Partner McMahon Clarke Legal |
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| SECONDARY TRADING OF FORESTRY MANAGED INVESTMENT SCHEME INTERESTS |
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Change has been the only constant in the agribusiness managed investment sector. In the past decade there have been a number of significant changes which have impacted upon investment in agribusiness schemes and the taxing of that investment. The changes have been both legislative and regulatory.
The most recent has been the passing of the unflatteringly named Tax Laws Amendment (2007 Measures No. 3) Act 2007 which came into effect from 1 July 2007. This legislation facilities the operation of a secondary market for interests in forestry managed investment schemes. Whilst trading interests has never been prohibited outright, there was the looming spectre of the Australian Taxation Office (ATO) ready to claw back claimed deductions if an investor exited a scheme before its end date.
READ MORE |
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Tom Elliott |
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Managing Director MM&E Capital |
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| CONSOLIDATION OF AUSTRALIA’S AGRICULTURAL INDUSTRY IS NOT ONLY INEVITABLE – IT’S ESSENTIAL |
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Over the past few years the agricultural sector has had a tough time. Farmers have had to cope with drought, fire, rural workers migrating to the mining industry, rising interest rates and, in many cases, falling commodity prices. Curiously, this hasn't prevented many investors from wanting to invest in the sector; indeed, as one such person said to me recently, "Even during the Global Financial Crisis, people still have to eat", which is a profoundly true statement. Still, as the recent collapse of Timbercorp proves, investment in agricultural is not without its risks.
There are a number of key issues investors need to face before committing money to rural businesses.
READ MORE |
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