Agricultural Investing: Diversification

AgVictus Capital Management (AgVictus) is providing this site and its contents on an “as is” basis and makes no representations or warranties of any kind with respect to this site or its contents. AgVictus does not represent or warrant that the information accessible within this site is complete or current. This website and its contents are not intended to sell products or services. The following assumptions and sources were used in preparing the Farmland vs. Financial Assets – 20-year Comparison Table.

General Assumptions

Investment Returns

The Investment Returns were calculated based on annualized returns over the stated 20-year period using the Data Sources listed herein.

Risk

The Risk is expressed as the standard deviation of the annualized returns over the stated 20-year period using the Data Sources listed herein. The higher the standard deviation of investment returns, the greater the volatility and risk.

Sharpe Ratio

The Sharpe Ratio was developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance and is calculated by subtracting the risk free rate (assumed to be 2.9%) from the annualized return over the stated 20-year period and dividing the result by the standard deviation of investment returns over the same period. A higher result is regarded as more financial return for the risk of the respective investment.

Correlation with Farmland

The Correlation with Farmland is calculated using the annualized returns over the stated 20-year period using the Data Sources listed herein. Generally, a lower or negative correlation is assumed to provide added diversification in an investment portfolio.

Data Sources

Emerging Market Equities

The data for this series was computed from the performance of the Morgan Stanley Capital International Index (MSCI Emerging Markets) and includes stocks in 21 emerging market countries around the globe.

International Equities

The data for this series was derived from the performance of the Morgan Stanley Capital International Index (MSCI EAFE) and includes non-U.S. stocks, including those in Europe, Australasia and the Far East.

U.S. Aggregate Bonds

The data for this series was computed from the performance of the Barclays (formerly Lehman Brothers) Aggregate Bond Index and includes U.S. government, corporate and mortgage-backed securities.

U.S. Commercial Real Estate

The data for this series was derived from the National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index.

U.S. Large Cap Equities

The data for this series was computed using the Standard & Poors 500 Index (S&P 500) and measures the market-value-weighted performance of 500 large capitalization U.S. stocks which are traded on the NYSE, NASDAQ and AMEX exchanges.

U.S. Farmland

The data for this series was computed using the respective National Council of Real Estate Investment Fiduciaries (NCREIF) Farmland Indices.

U.S. Small Cap Equities

The data for this series was computed using the Russell 2000 Index (Russell 2000) and measures the market-value-weighted performance of 2,000 smallest capitalization U.S. stocks in the broader Russell 3000 Index which are traded on the NYSE, NASDAQ and AMEX exchanges.

U.S. T-Bills

The data for this series was derived from the performance of 90-day Treasury Bills auctioned by the United States Department of the Treasury (UST).

U.S. Timberland

The data for this series was computed using the National Council of Real Estate Investment Fiduciaries (NCREIF) Timberland Index.