UK-based investment manager Baring Asset Management has launched an international agriculture fund in the belief that strong demand from emerging economies and supply side constraints will continue to drive demand for commodities in the long term.

The Baring Global Agriculture fund aims to generate long-term capital growth by investing in companies which derive earnings from agriculture activities, along with those which have the potential to benefit from this theme.

Jonathan Blake, manager of the Baring Global Agriculture fund, believes that the building blocks remain in place for a strong recovery in what should be an extended commodity cycle.

“The growth of emerging markets such as China and India will ensure that this commodity cycle has many years to run, and consequently we are only through the early stages of this development,” said Mr Blake.

“Agricultural commodity markets remain tight, with strong demand from both emerging and developed economies, combined with a supply side struggling to significantly increase production.  Inventory levels are also at historically low levels globally, which will further exacerbate these supply constraints.”

Mr Blake is confident that the global downturn will not result in a decline in demand for soft commodities, and believes that historically such falls were primarily due to weather related events rather than a recessionary environment.

The Global Agricultural fund, which carries an annual management charge of 1.5 per cent, is UK-domiciled as an open-ended investment company.  Baring has linked up with UK financial services group Standard Life in a deal which means that for a four-month period its IFAs will have exclusive access to the fund through Standard Life’s platform.

BAM, which is part of the MassMutual Financial Group provides services for private clients, retail investors and institutions worldwide.  At 31 October BAM's assets under management stood at $31 billion.