Why the world needs grain

There is one asset class which can add true diversification to your portfolio yet remains relatively cheap, says Mark McLornan of Agro-Terra: grain. He shares three of his favourite plays on the commodity.

A professional investor tells MoneyWeek where he'd put his money now. This week: Mark McLornan, founder of Agro-Terra

The general view among investors is that a balanced portfolio consists of equities, bonds, real estate and a little cash. The trouble is, due to the current high leverage in these markets, they will all move in sync with interest rates. But one asset class can add true diversification yet remains relatively cheap: grain. Prices have been totally uncorrelated to economic activity and hence interest rates for at least the past 50 years. The main price drivers are weather, population growth and productivity gains. Since June 2005, Agro-Terra has been building a portfolio of grain farms in Latin America for investors. I believe the fundamentals make grains a once-in-a-decade opportunity.

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