Nuveen announced yesterday that it has expanded its ongoing relationship with iCapital to begin offering its Nuveen Global Farmland strategy to advisors on iCapital’s platforms.
The firms have had an ongoing relationship since the mid-2010s and it has helped Nuveen, a TIAA-owned investment manager based in New York, break into the wealth management channel. It was already offering its real estate, private credit and private equity strategies through iCapital, and its expansion into an agriculture asset was a logical continuation of the relationship, said Keith Jones, head of global alternative investment products at Nuveen.
“As we started to grow our awareness within the financial advisor population of what Nuveen has for alternative investments … [Nuveen Global Farmland] became a natural extension because the themes around differentiated resilient income has been pretty consistent,” he said.
The farmland strategy was originally established as an institutional product in 2019, and it already has a little more than $12 billion in assets under management, according to the firm. It invests in different agricultural regions around the world. The firm looks for wine grapes; row crops such as corn, rice and cotton; and horticulture crops such as almonds and raisin grapes.
Given the growing population, Jones said investing in agriculture makes sense as an investment.
“We keep growing as a population but the actual available land to produce food is shrinking,” he said. “There’s a big need for us to be investing in this space to continue to be creative and innovative in technology to produce more.”
Dan Vene, co-founder and a managing partner at iCapital, has followed agriculture assets for years and agreed with Jones about their importance as the population increases.
“The professionalization of farmland assets is a very important theme,” he said. “People have been farming for hundreds of years but the ... technology that they use and the private equity overlay and level of sophistication that firms like Nuveen brings to the space really yields additional effectiveness and returns for investors.”
The decision to offer the farmland strategy through iCapital was initiated by Nuveen, after its advisor clients pushed for more durable products for their clients, according to Jones.
“The catalyst for launching the product was really more demand coming from the advisor community, and they were looking for different ways to access more resilient income that had a nice inflation hedge tied to it,” he said.
iCapital said it was not specifically looking for an agriculture fund.
“In this particular case, we are not necessarily going out and finding the fund we desire to work with,” Vene said. However, Nuveen’s expertise was a factor in iCapital’s desire to partner. “[Nuveen is] far and away a leader in the space and brings forth a level of sophistication in investing in farmland that very few investors have the capabilities [to do] today.”
Nuveen Natural Capital is Nuveen’s land-focused asset management program; it manages the farmland strategy and uses an active and vertically integrated asset management approach including everything from the property to the portfolio level. It also engages with local experts who will assist in the diversification of the product and helps at the property level to enhance the productivity and sustainability of farmland assets, the firm said.
“Our managers focus on identifying diverse farmland sectors that are best positioned to benefit from a broad range of macro dynamics and local attributes, including market and governance factors in specific countries and regions as well as supply and demand factors like changing diets and consumer preferences,” Jones said.
The fund investments are also geographically diverse: While a majority of them are in the U.S., a portion are in Chile. It is that difference that Jones said will make the fund successful.
“We do think that having some diversification across a global footprint is going to help drive value in the portfolio,” he said.
The fund provides less volatility than commercial real estate but still has a similar return profile, Jones explained. One of the goals is to give an investor institutional experience. The fund will not provide much liquidity and will be a buy-and-hold fund, Jones said.
Nuveen makes the farmland strategy available for white labeling and it’s also expected to be available on the iCapital Marketplace, which makes it available to a large spectrum of private wealth channels including those for independent RIAs, independent broker-dealers, and other wealth management firms, Vene said.
Nuveen will initially not charge any setup fees but will charge management fees, Jones said. He declined to say how long the grace period will last.
iCapital will help with investor onboarding and allow advisors to research the background on the fund including its strategy, manager and other items. The firm also provides support such as evaluations and NAV statements, the firm said.
To educate advisors about the use of the farmland strategy, Nuveen will reach out to the wealth channel to discuss with advisors the ways farmland fits into a portfolio and how to integrate it with other alternative investments such as real estate, Jones said.