Question 1

What Sets Farmland Apart From Other Investment Options?

Accepted Answer

Farmland has demonstrated strong absolute returns over the past several decades. It averaged ~10% total annual returns (income + price appreciation) from 1992 to 2018. Farmland has low volatility as compared to most other asset classes. It provides stability for investors, especially during adverse market conditions. The farmland index hasn’t had a negative year in the last 20 year period.

Question 2

Does Farmland as an asset class offer diversification?

Accepted Answer

Farmland's uncorrelated returns compared to traditional asset classes such as stock and bonds offer welcome diversification, especially in periods of stock market downturns. E.g. the farmland index was up 20%+ during the 2008-2009 Great Financial Crisis. Farmland’s excellent risk/return/correlation profile coupled with its resilience both to recession and inflation have led smart forward-looking institutions to significantly increase their investments in farmland over the last 30 years.

Question 3

Do institutional investors add farmland to investment portfolios?

Accepted Answer

The increasing scarcity of farmland and its lack of correlation with other asset classes make it an exceptionally strong diversification tool for virtually any portfolio that have driven institutions to significantly increase their investments in farmland over the last 30 years.

Question 4

Does FarmTogether function as a REIT?

Accepted Answer

FarmTogether is not a Real Estate Investment Trust (REIT). With FarmTogether, you select the farmland, its location, and the type of crops. You pick and choose. The investor has full control of where their money gets invested. You own units of an entity solely devoted to the ownership and operation of an asset. REIT shares, on the other hand, do not classify as physical ownership of a piece of real estate. You are not only at the mercy of that company management decisions, but you are also bound to their strategy, the properties they purchase, and ultimately to the stock market's constant instability.

Question 5

Is farmland "Gold with a Coupon?"

Accepted Answer

We think so! Like gold, farmland is a real asset. Farmland represents an almost $10 trillion market globally while all gold ever mined is valued at roughly $7 trillion. In uncertain times, investors look for safe haven in real assets like farmland, timberland, and gold. Like a fixed financial asset, farmland also generates regular (annual or more frequent) income. In addition to the underlying value of a tangible, physical asset, farmland produces raw materials used in many essential products from food to textiles. Furthermore, American farmland is the most productive farmland in the world.

Question 6

How does farmland compare to real estate?

Accepted Answer

Farmland is similar to traditional real estate in functionality and can be a great alternative. Both are real assets that generate regular rental income. They are both hedges against inflation that provide diversification from financial assets. However, farmland tends to have lower cyclicality and volatility than commercial real estate, for example, and has been shown to provide a greater Sharpe ratio boost to most portfolios. Read about 5 ways farmland compares to traditional real estate.

Diversify with Low Volatility Assets