Urbanization…and Investing

“A new generation [both in the U.S. and globally] is flocking to cities, driving major economic and social shifts.”

According to research*, urbanization trends are impacting everything from agriculture to real estate to infrastructure. Here are a few trends cited:

  1. The next generation is creating a new generation of farms.
  2. As urbanization reduces the availability of arable land, boosting farmland efficiency is critical.
  3. Urbanites lean toward higher-nutrition, higher-value foods.
assorted vegetable lot
Remember when kale was used only as a garnish?

These very real trends have created all sorts of alternative investment opportunities. As with any “alternative investment” there are very real risks. Alternative investments can be made through both the public and private markets, private being the much higher risk. Public investments can be made through public stock and bond exchanges and mutual funds. Private investments involve layers of qualification in terms of a client’s assets, sophistication and most important their risk tolerance.

With that said, a category of alternative investing called “Impact Investing” has emerged from numerous asset managers. Topics covered with impact investing can be:

  • Agriculture – farms vs. cities
  • Infrastructure – increasing pressure on existing infrastructure assets
  • Urbanization – the urban socioeconomic challenge
  • Real Estate – tilt toward Asian Pacific cities.

Investors naturally want to be in on “the next big thing”. Oftentimes and historically the public markets have successfully delivered the opportunity to be financially exposed to “the next big thing”. Think: Microsoft, Netscape, Facebook…even energy and pharmaceutical/biotech companies. And important – over the long-term (10-20-30+ years) index investing across the broad public markets has delivered lower risk and lower cost exposure to nearly all market sectors and company sizes. “The next big thing” has been a part of the broad markets – and thus has contributed to the historic, gradual rise of most global public stock and bond markets.

Private alternative investing can also be made with an amount of research, perspective, advice and qualification. This discussion is meant to point out that excellent research exists to contribute to the process of gaining exposure to trends such as urbanization.  Please feel free to ask me for more information.

*Source: Nuveen. Nuveen Knows Alternatives: Upcoming Urbanites

 

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