Their type of approach was  difficult to execute during the  financial crisis as there were not too  many sellers willing to accept the deeply discounted offers for assets  whose “long-term prospects had not  materially adjusted,” Hedley says.  But even if cheap deals were  available to super funds during  the crisis, many industry funds  were not able to buy more unlisted  assets because the collapse of listed  markets meant funds’ portfolios  were at or close to their thresholds  for illiquidity.  But now the stalemate between  buyers and sellers has eased. Still,  deals are not yet being widely struck  because debtor banks generally do  not want to force asset sales that  could incur write-offs, or give up  assets at prices below their long-run  fair value. 

Gold shines as the  greenback falls Some infrastructure  investments provide a better  defence against inflation than  others. Utility assets can  incrementally increase the prices  they charge for power and  water, providing an “automatic”  inflation hedge, Hedley says.  Other assets, such as governmentcontracted  hospitals and schools,  are underpinned by long-term  agreements, the payments for which  often account for inflation.  But inflation as a result  of massive fiscal spending by  governments during the financial  opposed to physical assets.”  Another incentive to invest  in commodities was the current  supply squeeze. Calligeris says the  financial crisis forced resources  companies to delay re-investing in  their business operations, inhibiting  their ability to meet demand in the  recovery.  “We saw a big supply-demand  imbalance. There wasn’t enough  gold to satisfy demand, which  causes prices to rise, and central  banks are buying a lot of physical  assets, especially gold.

“When you have long-term  underinvestment, supply can’t keep  up with demand, so you get the  price staying higher for longer.”  In its mandate, Taurus has  the flexibility to buy a maximum  exposure of 25 per cent of the  capital to resources companies  when their stock price valuations  fall well below the prices of the  metals they mine, providing a  cheaper way of accessing the  underlying commodities.  “What you’ve got is an  opportunity to buy the company  and the resources it has in the  ground for cheaper than what the  gold price is,” Calligeris says.  “What you might find is that  the price of a mining company  share might change, but the price of  gold hasn’t.”  Great southern lands

The resources boom continues  as a major investment theme,  particularly in listed markets, but  the Australian and New Zealand  timberland markets are opening in  a big way as governments privatise  more land. And this hasn’t escaped  the attention of offshore investors.  Timberland became popular in  the US during the 1990s, and after  “two solid decades” of transactions,  most deals in that market now  involve professional investors,  increasing competition and driving  prices down, says Eugene Snyman,  managing director of Cambridge  Associates in Australia.  But in the next five years,  at least two million hectares of  timberland should be released to  the Australian and New Zealand  markets as state governments,  distressed corporations and  managed investment schemes  continue to divest holdings.