Van Eyk Capital calls for fair comparison on agribusiness schemes
Van Eyk Capital will roll out its annual agribusiness survey this month with the research group encouraging advisers and clients to consider the benefit of the investments compared with other asset classes over similar time frames.
Van Eyk Capital director Harry Sookias says advisers must consider the costs and risks in using agribusiness investments compared with the yield but do so on a pre-tax basis.
Sookias says pre-tax conditions should form the basis of any comparison between agribusiness schemes as well as other asset classes since post-tax considerations can vary due to differing tax regimes imposed on asset classes.
According to Sookias the agribusiness sector has experienced a large downturn in the amount of schemes open to investors dropping from nearly 80 in 2001 to around 45 this year while inflows will fall from $1 billion in 2001 to $250 million in 2003.
Sookias says the drop in the number of schemes is linked to the removal of the 13 month tax deduction rule, Australian Tax Office action on non-complying projects and a Senate select committee investigating mass marketed schemes.
He also says the industry has and will undergo rationalisation with the big four to five project managers coming to dominate about 80 per cent of the agribusiness industry.
Of those projects open this year Van Eyk Capital says it would only consider for rating those groups who had a product ruling and publicly available offer document.
Sookias says the group would make a detailed examination of about 20 groups, leading to site visits on half that number with final recommendations on a three to five agribusiness projects expected in three weeks.
The survey will be made available to financial planners through van Eyk’s i.rate subscription service with costs for the survey changed in a move designed to allow more planner’s access to the report
Under the new arrangements the survey will be available at a cost per adviser, with an average figure of $1200 expected, however this would operate on a sliding scale and prices would be capped for use across large dealer groups.
The publication of the survey dispels rumours the group had moved away from researching the agribusiness sector, which had arisen over the last 12 months.
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Jason Spits
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