Booster Client Update - Adding yield and resilience through unlisted investments
Adding yield and resilience through unlisted investments
For most investors, lower interest rates have been a key feature of the past 10 years, thanks to the extraordinary policies adopted by the world’s central banks. This has particularly reduced income returns on fixed interest investments, raising the question of how best to deliver the “income” part of Farming portfolio returns in the years ahead. Fixed interest investments (like bonds) still have a very valid part to play in providing a promised rate of return and supporting performance when shares are weaker. However, today’s environment calls for a wider approach to broaden portfolios’ source of returns, while also increasing their resilience to the fluctuations in share markets.
Compared to traditional portfolios focused on “listed” investments, the best opportunity to achieve this comes from adding investments that are not traded on share markets (i.e., “unlisted” investments). History shows that these benefit from an extra return “premium” in exchange for less ability to sell on short notice. This adds to the benefit of having a wider range of investments to choose from – particularly relative to NZ’s share market. A more unique feature of unlisted investments is the ability to have greater input into their management (try influencing Google’s policies!) The key factors to manage are the appropriate allocation, given unlisted investments’ lower saleability (so still only a minority part of overall portfolios) and ensuring the right “due diligence” processes are in place for each investment.
However, a key strength of this approach is the ability to improve investments’ overall income yield. While residential property yields remain stubbornly low, carefully targeted investments in direct rural and commercial property, higher-yielding shares in unlisted NZ companies, and infrastructure investments all provide potential ways to achieve this. Importantly, these areas combine the best features of income yield with some protection against higher inflation down the track. Not least, it gives us as investors the ability to do well by doing good – to improve portfolio returns while supporting kiwi businesses taking on the world.
Do You Have a Toxic Relationship with the Phrase “Treat Yourself”?
The phrase “treat yourself” has become a modern mantra. It’s a great way to celebrate a milestone, reward a job well done, or break free from your everyday routine. However, when it comes to our bank accounts, treating yourself can sometimes cause more harm than good.
One small indulgence leads to another, and before you know it, the lines between self-care and overspending blur. You might walk away from the register with a bag in hand but a sinking feeling in your stomach. Sound familiar?
Scroogenomics at Christmas: Finding Joy Beyond ‘The Extravagance’
Gazing through the dimly lit windows of his modest office, Ebenezer Scrooge pondered the modern-day Christmas, “Ah, Christmas – each December, a tide of frivolity sweeps the world, with consumers collectively parting with an estimated $1 trillion globally on holiday spending.”
Reflecting on this, the Scroogenomist wonders, “What if Christmas were not marked by gaudy extravagance, but by acts of kindness? A season where gifts are not measured by their price tags, but by the care and thoughtfulness behind them. A handmade scarf, a heartfelt letter, or simply the gift of time – all these carry more value than gold. How uplifting it would be if people prioritized what truly matters: love, compassion, and the joy of giving.”