A new way to diversify your portfolio

A new way to diversify your portfolio

Sponsored by Syndex

Mike Jenkins explains how Syndex Exchange brings together buyers and sellers.

In New Zealand, there are thousands of interesting businesses, many of them operated by people of incredible talent, and wanting to grow.

All these businesses need is investment at the right point to help them boost production, trigger exponential growth and catapult them onto the global stage.

  Mike Jenkins.

Mike Jenkins.

These thriving companies are types of business that are not traditionally considered within investment portfolios, because they haven’t traditionally been easy for individual investors to access.

We call these ‘alternative investments’ – largely real assets like shares in agricultural and property investments and syndicates, or private businesses. And they make great options to help diversify a more conventional portfolio, or as a stand-alone investment option.

We’re now seeing a growing appetite for investment as New Zealand matures, and economies change – and I believe this is one sector that, if made more accessible, could offer multiple opportunities in the form of both personal wealth and the country’s GDP (Gross Domestic Product).

Alt Universe image ANG.jpg

Liquidity is an issue

What holds this type of investment back, financial advisers would say, is how hard they are to buy and sell (known as liquidity), and how it’s difficult to compare them to similar investments, track their performance and assess their viability as a strong investment. If these problems were solved, then they would become a more attractive investment, opening the door to a range of investment options in the private economy.

Investors could enjoy returns from tangible land and income businesses, or invest in small and medium-sized businesses (SMEs) as owners look to sell down shareholding. If you can bring supply and demand together simply, that will make for some really interesting investments.

New Zealand once relied on dairy as its main exporter, but today many other sectors are gaining pace, including horticulture and wine, but also primary sector innovations.

The economy continues to diversify, into commodities and industries that are not reliant on the share market, making New Zealand an ideal location for investing in alternative asset classes.

How can you get started investing in this area?

• Understand the structure of units or share offerings.

• Look at the management structure of the investment.

• Compare it to other business investments – you may find it’s not that different.

• Check out the company’s financial history.

• Look at the structure of the shareholders’ agreement.

Something that’s worth considering with these types of businesses is the quality of the people behind them.

Why syndication?

Syndication is an ideal way of buying a small share in big assets that many of us can’t afford alone these days or you don’t have time to run full-time.

Syndicated assets offer investors access to talent and expertise, and they can contribute investment capital, leading to investments that work for everyone.

An ANZ report highlighted the issues in this area. “Farmers face significant challenges in raising capital to fund growth and support farm turnover,” it says.

“New structures for owning and operating farms need to be encouraged to attract investment from domestic and foreign investors and capital markets.”

Buy and sell alternative assets

A lack of liquidity can damage an investment’s returns or simply put off a potential investor. This has been the number one concern voiced over this sector.

Syndex Exchange brings supply and demand together in one place, providing a secondary market for these assets that overcomes this hurdle, and makes this a category that’s ripe for growth.

It offers peace of mind for investors in companies like MyFarm and Silverfin, who know they can trade their shares in these assets. It also supports businesses in capital-raising, with companies like Snowball Effect.

It brings together the demand for alternative investments with a previously untapped private economy market, and uses world-leading software and Kiwi ingenuity to bring a unique fintech platform to the global marketplace.

Syndex provides a way into and out of proportionally owned assets, price discovery and information for both buyers and sellers. The company also covers all your regulatory requirements, manages documents and runs communications between syndication groups, buyers and sellers. It offers tools you can use to review investments, such as comparative data and historic figures.

Latest Offers Listed on Syndex

Syndex Exchange has two new offers available to investors.

An opportunity exists to invest in LINK, Australasia’s largest business brokerage

There is a global “succession wave” occurring as the baby boomer generation is reaching retirement age. A large number of baby boomers who own businesses are looking to sell and, conversely, there are buyers from younger generations hungry to become business owners and operators. This is a wholesale issue.*

Invest in an irrigated dairy farm

Phoebe Plains Limited is a developing, irrigated dairy farm which is in its 7th production season, and is located in the Cheviot area of North Canterbury. This is a wholesale* issue.

To keep updated on current primary and secondary offers as soon as they reach the market, register here.

*A wholesale issue is available only to wholesale investors, which are large corporations or experienced investors, as defined in the Financial Markets Conduct Act 2013.

This article was written by Mike Jenkins and brought to you by Syndex.

JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions. This story reflects the views of the contributor only. Content comes from sources that JUNO considers accurate, but we do not guarantee that the content is accurate.

This article provides general information only. The information is not advice and does not have regard to the financial situation or needs of any reader. As individual circumstances differ, you should seek appropriate professional advice.

First published 11 September 2018


SUBSCRIBE

Sign up to our newsletter to receive the latest news, updates and event invites from JUNO investing magazine.