Julie Koeninger  00:49

I realize I've played an important role over the years in telling the story of agricultural investing, making this somewhat unusual asset class understandable and accessible to more investors. I now feel an obligation as a woman in ag. in a leadership role to make the industry acceptable for more women, so we can be both women and succeed in ag. 

And so, whether it's championing careers in ag to female students that we sponsor at an industry conference, or encouraging and advocating for my younger women colleagues, or sometimes directly calling out bias when I see it, I think I feel an obligation to do all it can to help advance women in the industry, and I hope I'm having at least a small impact. But while it has improved, I do think it's still fairly male dominated, but there's lots of opportunity, and there are lots of very talented women in it. So, so I'm hopeful for the future.

 

Aoifinn Devitt  02:00

I'm Aoifinn Devitt, and welcome to the 50 faces podcast, a podcast committed to revealing the richness and diversity of the world of investment by focusing on its people and their stories. I'm joined today by Julie Koeninger, who is managing director and Senior Portfolio Manager in agriculture at Manulife Investment Management and leads business development for Manulife Investment Management's Global Agriculture strategy. She's over 30 years of experience in agriculture investing, having worked in a series of roles at other institutions prior to joining Manulife, and she led the first ever securitization of US agricultural mortgages. Welcome Julie, thanks for joining me today.

 

Julie K  02:35

Thanks Aiofinn. It's a pleasure to be here.

 

Aoifinn Devitt  02:37

Let's start with your journey into a career in investing. Can you talk us through how it started, and were there any surprising turns along that journey?

 

Julie K  02:45

Sure, happy to, it didn't quite end up as I expected. I joined a New York investment bank after graduating from business school, and I worked for a couple of years there in mortgage-backed securities.

So, over that time, I gained experience in sourcing and acquiring residential mortgages to create mortgage-backed securities, as well as selling the resulting securities. Soon, I ended up moving to Boston to take a sales and trading job. But that didn't exactly work out, as my team was laid off shortly after I joined. And so then I was looking for a job.

And at that time, I saw this interesting ad looking for someone with just the type of varied mortgage backed securities experience that I had, and it was John Hancock looking for someone to help them develop a business securitizing agricultural mortgages. A couple years prior, an organization called farmer Mac had been founded by an act of Congress in response to the 1980s farm crisis to create a secondary market for farm mortgages, similar to the residential secondary market.

And the idea was to provide enhanced liquidity for farm mortgage lenders. John Hancock had been lending to farmers since the 1800s and so I did end up joining them.

We did the first ever securitization of agricultural mortgages through farmer Mac proving the concept with loans from John Hancock's portfolio. But the agricultural mortgage conduit idea, buying loans from rural banks didn't really take off liquidity, and the industry had improved by that time, with the Farm Credit System and other lenders back in the market as the farm economy continued to recover.

And while farmer Mac was patterned after Fannie Mae and Freddie Mac, farm mortgages were far less standardized in residential mortgages, making it harder to develop a pool of mortgages with a consistent term. So after the securitization transaction, I ended up pivoting toward making agricultural loans for John Hancock's portfolio, rather than securitizing them. But at the same time, another opportunity arose.

So as I was learning about the farm economy, it continued to improve. John Hancock and other lenders were realizing that some of the. Equity farmland investments they've acquired through foreclosure during the farm crisis were actually providing good returns, and they wanted to hold on to these investments. And it turns out that John Hancock actually had a fund developed in the early 80s that included some third party investors, was invested in farmland, Timberland, both debt and equity. So I had the opportunity to work with this fund, which provided a track record and really formed the beginnings of the Hancock agricultural investment group, which was then part of the Hancock natural resource group, which eventually became Manulife investment management, timberland and agriculture. But I'll get to that.

This group was formed to make intentional equity investments in farmland for the benefit of institutional investors. So I served for a number of years as Portfolio Manager for the group, but by 2005 I was looking for more flexibility to volunteer my kids school.

So I left and started an independent farmland consulting business. After a few years in consulting, I took on roles at a couple of different timberland investment managers looking to enter the farmland space, and I helped each in their launching of farmland offerings.

And then about six years ago, I had the opportunity to return to Hancock, now branded as Manulife Investment Management timberland and agriculture in a business development role, and then recently, I took on a portfolio manager role when an opening arose. So I never expected my career to develop in this way. Certainly, I had no idea that these types of jobs existed when I was in college and business school. But I took a turn toward agriculture, and suddenly I've spent more than 30 years in this space, which is really kind of hard to believe.

 

Aoifinn Devitt  06:44

It’s fascinating, because I would have automatically assumed that somebody maybe has a farming background that grew up on a farm, or grew up surrounded by farmers or speaking the language of agriculture. And it's interesting how you kind of backed into that through products, perhaps mortgage products and the like. Is agriculture an area that you do need to have a highly specialist knowledge of? Or is there a learning curve? And what kind of a learning curve is that? 

 

Julie K  07:10

Yeah so, there are a lot of people that are in this space that have that background. There are a number of my colleagues that do have agricultural economics backgrounds, and obviously out on the farm, there are folks that majored in agricultural operations, and those folks are part of the equation.

But to be in the investment side of things, I think that especially today, as agricultural investments have become much more mainstream and part of real assets and part of natural capital, there's an awareness of how these assets fit into an investment portfolio, and the characteristics of them really can easily fit into a portfolio, like other agricultural investments. And actually, you know, as we were developing this business in equity investments in farmland, you know, when I first started working in it, people couldn't figure out what I was doing, what I was investing in, especially in New England, where farmland was really giving way to higher, better use pressure for housing, etc, I would be asked if I was benevolently providing subsidies to struggling farmers.

So in order to really kind of validate farmland as an investment and ourselves as managers, my boss and I got our CFA designation. So we needed to prove to investors that we understood where they're coming from as portfolio managers and asset allocators, we needed to demonstrate how putting farmland in their portfolios could improve returns and lower risk. So we published articles about the strength of the farm economy and how farmland fit in a portfolio.

And we tried to speak at conferences where we were often relegated to small audiences at the last session on the last day of the conference. But gradually the market has developed. And so I think that farmland is just now seen as part of real asset investing.

And so if you have an investment background, you're able to get into that side of things. But obviously there are still parts of it that are very technically oriented, and you need that agricultural background.

 

Aoifinn Devitt  09:07

And we'll speak a little bit more detail just a minute about the characteristics, say, a farmland investment, its role as an inflation hedge, as an income generator, just those usual kind of outcomes, I suppose, that clients and investors are looking for with any asset class in different ways. But first, if you could just bring us up to speed on the evolution of that, because now we're hearing a lot about increased focus on sustainability, regenerative agriculture is a term that we've all come familiar with. What changes are you seeing in on this aspect with respect to the space, it's a shift towards, it's obviously always been a nature based solution, but now this focus on regeneration.

 

Julie K  09:47

So I've been working in this asset class long enough to remember giving presentations on stewardship of agricultural assets, long before the term ESG or sustainability or. In our bag became popular.

So it's worth remembering what we always say, that good stewardship is good business, particularly in real assets such as agriculture. The you know, you've got to be sustainable. Sustainable outcomes have always gone hand in hand with financial outcomes, because in order to continue to produce food, fiber, feed and fuel, these need to be managed sustainably so that they will continue to operate.

So really, regenerative agriculture and sustainably is about optimizing productivity using the fewest possible inputs. And your inputs are expensive, so utilizing technology that allows for, say, precision irrigation and fertigation, putting the water in the fertilizer only where it's needed, when it's needed, in the precise amounts needed makes sense from a sustainability and an economic and investment perspective.

And utilizing what we today call regenerative practices that help the soil hold on to that moisture and prevent erosion make both economic and environmental sense. So I think there's a lot of hype and confusion in the market about regenerative AG.

We define regenerative agriculture as a farmland management framework where the goals of soil health and productivity guide the management decisions and leading to this optimized production that also takes into account biodiversity and sequestration of atmospheric carbon in the soil.

So, this is really about deploying a series of tools that are available to farmers from horticultural agricultural perspective, to reach that outcome. Many of these tools and activities really been around for years. For example, the practice of planting cover crops as a means of maintaining soil was was actually a response to the Dust Bowl situation of the 1930s.

But I do think we're seeing more awareness of sustainability and regenerative practices from both investors and consumers who are beginning to demand verification of the use of these practices. So I think we'll see more certification and more tracing capability so that we'll be able to know exactly where and how our food was produced.

From a return perspective, we're not yet seeing a huge change in return profile. For example, soil health has always been a huge factor in the value of a particular farm property, but now we're seeing an interest in soil health because it's where carbon can be sequestered.

And once we're reliably and consistently able to measure soil carbon, and there's a lot of work going on in this area, we're doing some trials, but it's still something that is folks are trying to determine what's the best way to do it and to get consistent readings, we may see more differentiation in land value based on soil Carbon and the ability to create and sell carbon credits from a piece of farmland.

So I think that that additional value will be more recognized in the future.

 

Aoifinn Devitt  12:49

That’s a big picture in terms of the role of agriculture. So would you say it's a mainstream investment at this point? Would you say it's more of a sophisticated investment for highly sophisticated institutions?

 

Julie K  13:01

For institutional investors, it can be a diversifier. There's a lot of research that shows if you run a mean variance optimization, because farmland and timberland and real estate, all real assets tend to be uncorrelated with typical financial assets that are daily priced. Adding these types of assets to a portfolio can reduce your risk, improve your return, improve your Sharpe ratio.

So investors are really coming around to the idea of adding these for a number of reasons, and it's really typically a small portion of a portfolio, depending on how they categorize it, real assets, real estate, natural capital, could be something like, you know, five to 10% but the way that we you look at it is both as a diversifier And increasingly, as a way to add impact, to do something good for society.

The whole idea of natural capital, farmland and Timberland, you know, sequestering carbon, we're able to feed the world. We want to do it sustainably. We've got to do more with less. And farmland has also proven to be an inflation touch. So there are a number of reasons to include it in a portfolio.

However, because it's illiquid, it's been difficult to develop products that really fit a retail market. There are some out there and always looking for ways to expand the market. But it's more of a of an institutional it's still more of an institutional product these days.

 

Aoifinn Devitt  14:31

And do you find the interest in the asset class ebbs and flows with, say, the price of commodities, say the price of corn, wheat, etc, and equally, does it with inflation? How reliable of an inflation hedge has it proven to be over time?

 

Julie K  14:46

It has proven to be a good inflation hedge during periods of moderate to strong inflation. And we we've seen that. But depending on which period you choose, there are sometimes, for example. After the great financial crisis, when inflation was very low and farmland returns were very high, there was actually a negative correlation, but over the long term, it has proven to be a good inflation hedge.

And we saw that a couple of years ago, when there was a run up in commodity prices due to some scarcity, due to some weather issues and the Ukraine Russian war, we saw a response that showed despite higher input costs, commodity prices responded. This got capitalized into farmland values as well.

 

Aoifinn Devitt  15:31

Just getting back to the sustainability claims and the development and the research around carbon sequestration, we're quite alert to the possibility of greenwashing, or green hoping across some other areas, within real assets on sustainability generally. How much do you think this is a potential problem in the field of agriculture, that it becomes kind of tainted with the same brush or not? There isn't getting sufficient scrutiny maybe to some of these claims.

 

Julie K  15:58

I think there's potential for that, with all the interest in carbon, and people think that it's going to be easy to just generate carbon credits, and it's not necessarily. It's soil carbon is difficult to measure. It changes over time.

There's a lot of different people looking at different ways to measure it, but I think the way that we look at it is that soil health is important. We've always been about soil health.

So if we do that, which we do in managing agriculture, we're doing something good for the world. And so it's all good whether you can measure it, whether you can create a carbon credit. Doing regenerative practices and managing sustainably is good for the world, is good for agriculture.

 

Aoifinn Devitt  16:41

Of course, whether or not the credits are there, the fact that it does sequester the carbon is part of that dual benefit. So a really exciting research and progress there, I'd love to then move to another topic, which does come under the umbrella of ESG. We haven't talked about ESG as a term, but around diversity in the investment industry. And the reason I was attracted to you and to speaking with you here was because you have, said such a long career in investing. You're a senior in your field, and you've clearly moved through not only the investment industry but the agricultural field, which probably have their own diversity challenges. How would you say your own journey has been in those two fields? Have you noticed a difference between them? Have you found that you were in a minority as a woman?

 

Julie K  17:24

It's interesting, both industries have been relatively slow to move toward parity among men and women, and we're still far from it in both I think, and I think I and the women who have been on this journey have evolved in our perspectives on what it means to be a woman in a male dominated environment.

Our expectations of how we interact and thrive in these spaces and how we paved the way for those joining these industries. And this evolution is somewhat parallel to my college experience as a member of the sixth class to include women at a previously all male institution. We were only 25% of the class.

We were thrilled to be there to be one of the guys, but decades later, processing that experience along with women of my era and comparing it to the experience of more recent women, Grads still thrilled to have had the experience, but recognized that we put up with some things that were not okay.

Similarly, in the investment world in general, in the ag, investment world in The early years, I was more focused on being accepted as one of the guys and not drawing potential negative attention to the fact that I was not a man who grew up in agriculture. So I soaked up all the knowledge I could and was very careful to not ask the naive question that might hurt my credibility.

But I think over time, maybe it's just increased self confidence it comes with time or just becoming more comfortable in my own skin, I realize I've played an important role over the years in telling the story of agricultural investing, making this somewhat unusual asset class understandable and accessible to more investors.

And I now feel an obligation as a woman in Ag in a leadership role to make the industry acceptable for more women, so we can be both women and succeed in ag.

And so whether it's championing careers in ag to female students that we sponsor at an industry conference, or encouraging and advocating for my younger women colleagues, or sometimes directly calling out bias. When I see it, I think I feel an obligation to do all it can to help advance women in the industry, and I hope I'm having at least a small impact.

But while it has improved, I do think it's still fairly male dominated, but there's lots of opportunity, and there are lots of very talented women in it. So I'm hopeful for the future.

 

Aoifinn Devitt  19:40

Well, you're certainly helping us to shatter some stereotypes around both areas, and I think your own experience equally of taking time you mentioned to volunteer in your kids school, which is something that requires daytime hours, clearly away from the office, being able to segue into a consulting career and then back again is a great example. Some of that flexibility which you took charge of, it seems. Were there any, whether it be programs or part time opportunities or things that enable that journey for you? And what would you recommend to other women who want to do a similar thing in terms of owning their journey, but not cutting off completely from their art and craft?

 

Julie K  20:19

When I was in that situation, there really, there wasn't flexibility. I think today there's a lot more flexibility in terms of working remotely and taking time, and people understand that just because you're not there for an hour during the work day, you'll make it up, you'll get the work done.

It wasn't really the case when I was there. I actually went to an 80% week, which was just unheard of for someone at my level, so I took a 20% pay cut to be able to get a day off, and that still didn't work, because I wasn't able to have the flexibility I needed. So I said, you know, I just have to do this differently. And you know, it was kind of scary, but I decided to quit and start this consulting business.

But it was really wonderful to be able to do that, and the folks that I met in that business later on really helped me to get back into the business, to have had those relationships with some major pension plans, to be able to speak about that experience really helped me to re enter. So I'd say, to the extent, hopefully you're able to make the flexibility in your in your job work.

But if not, if you need to downshift, then try to stay in it so that, you know, you'll have that continuity, and try to keep up contacts. And you know, one other thing that I did at the time, it was really sort of helpful to me in the early days, when my kids were very young, I have twin boys and an older boy, 23 months apart. So they're now 28, 26 and 26 but in the early days, I was overwhelmed with work and family.

I was trying to make it all work, and I worried I wasn't making progress in my career, and I was trying to do the best have a good impact on my kids lives as well, and I just couldn't figure it out.

I hired a coach to help me determine what was next, and she taught me that I needed to value what I saw as unproductive time as much as I valued my productive time. So I learned to value activities that are not necessarily valued by society, such as driving kids to soccer practice.

You'll be amazed at what you learn by listening is powerful chatter and allowing myself time to be part of a book group, to get involved in my church, to run, something I love to do, and these are important to my and my family's well being.

So coming back into the industry, sure, if I had stayed I might be at a different level, a higher level, but I wouldn't trade my situation what I was able to experience by having it both ways.

 

Aoifinn Devitt  22:50

I love that, because in the investment world, we tend to think of things in terms of objective valuation. And I think that very point, it's very good wisdom from that coach, that certain things in our lives are not subject to objective valuation, that it's up to us to subjectively value them. So I love that concept. I will definitely take that on board. And then just thinking about this framework we've discussed in terms of agriculture investing, both areas are subject to what you might call force majeure. Agriculture, probably more than investing into investing is often man made, but in terms of storms, droughts, bad harvests, etc, these are all part of the setbacks and challenges of a life in agriculture, which farmers are known for building resilience and risk management, etc, all around that, regardless of their formal education. But in the framework of your own career, have there been setbacks and challenges, whether man made or natural occurrences, that have led you to learn any lessons?

 

Julie K  23:46

Oh, certainly. Well, I've been laid off from sales and trading job. I've had my investment group sold to another firm.

And as you noted, I left the mainstream investment world to start my own consulting firm and then reentered the business. So all these situations really challenged me to dig deep, to take risks, and ultimately enabled me to accomplish things I wouldn't have previously envisioned were possible.

So I think my experience proves to me and to others that we're stronger and more capable than when we give ourselves credit for looking back, I've certainly surprised myself in terms of what I've been able to accomplish in an industry that I had no awareness of really, when I was in college and in business school.

So I'm not a big risk taker, but when your backs to the wall and you've got to figure something out, you do, and I've sort of surprised myself.

 

Aoifinn Devitt  24:34

I love that. And you've spoken about your coach and the wisdom that was imparted there. Any other key people, whether in the workplace or outside of it, that had a key role in the evolution of your career?

 

Julie K  24:45

Yeah, I was trying to think this through, and I can't really point to like, one mentor or influencer per se. As there really weren't any, I could access in the industry I've been inspired by many of my fearless female college classmates and peers who've excelled in numerous fields far beyond what I've achieved.

I also owe a huge debt to my husband, Peter, who's a forester by training with a career in timberland investing and consulting, and he's been a sounding board and constant source of support and understanding in this unique industry that we share, and he's truly been an equal partner in raising our family.

And there's also my dear friend, Holly. She was a college administrator, a mentor that I met in my college days, and really she's until her untimely passing two years ago, she's been an amazing role model for me and a mentor for all aspects and stages of life. She's someone who was always able to bring people together to meet challenging goals while standing up for principles.

So I aspire to accomplish a fraction of what Holly accomplished in affecting positive change, and really to continue her work in making the world a more equitable place for all. So I think of her when I think about trying to make some positive change for women in agriculture.

 

Aoifinn Devitt  26:00

What a legacy she has left that you're now quoting from her here. That's really amazing. You've spoken about some of your loves and passions, and I think we share one for running, any calls of their interests that are particularly important to you.

 

Julie K  26:14

Yeah, so I’m into running, you know, I just wanted to say I don't do it as much as I like these days due to my sort of aging joints, but running is really my creative time when I let my mind wander and focus on making my body do the best it can amid the day's challenges, and by the end of the run, somehow I've thought about a different way to approach a problem or a conversation or how to word some kind of description. And my kids were active in sports.

I love going into their soccer and hockey and track and cross country competitions, and so now they're adults. Keeping up with them is still a huge priority for me, traveling to visit them, or planning a holiday vacation that we hope they'll join. And so it's really a joy to see them following their passion. So obviously, family is really important to me. I'm also involved in my college alumni activities, and in my church, I think it's really important to give back and it provides a community connection that's always very rewarding.

 

Aoifinn Devitt  27:08

My final question is around any words of wisdom or creed or motto that you have gathered over the years or have always held that you can share with us now.

 

Julie K  27:19

Yeah, I was thinking about this, this too, and I would say, I wish I'd been able to tell myself more to believe in myself and take more risks and know that things will work out. So I guess I'd say that to folks, you know, just believe more in yourself and to myself also, and to others, be less detail oriented so you can see the big picture. And as a perfectionist, I'm still kind of working on this one. Sometimes I get lost in the weeds because I want to make everything perfect, and so need to always look for the bigger picture.

 

Aoifinn Devitt  27:51

Well, thank you so much, Julie, those risks you did take have clearly paid off. That's what led us to meet each other in your leadership role now, and just thinking about our conversation here, it really does remind me very much of my image of farming. And I would admit, as a city girl, my image of farming is pretty rudimentary, but it's a one where we need diversification, we need resilience, we need the long term. We need to be all weather. We need to think about crop rotation and ultimately variety, but ultimately regeneration. So I think all of these aspects are not only evident in your portfolio, but also in the career story you have woven here. So thank you so much for coming here and sharing it with us.

 

Julie K  28:31

Thank you.

 

Aoifinn Devitt  28:32

I'm Aoifinn Devitt, thank you for listening to the 50 faces podcast. If you liked what you heard and would like to tune in to hear more inspiring investors on their personal journeys, please subscribe on Apple podcasts or wherever you get your podcasts, the views and opinions expressed in this podcast are those of the speakers are subject to change as market and other conditions warrant, and do not constitute investment advice or recommendation regarding any specific product or security. There is no guarantee that the investment strategy discussed will be successful or achieve any particular level of results, any economic or market performance information is historical and is not indicative of future results and real focus are guaranteed. Investing involves risks, includes the potential loss of principle. Financial markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market or economic developments. The information provided does not take into account the suitability investment objectives, financial situation or particular needs of any specific person. All overviews and commentary are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax investment or legal advice. Clients and prospects should seek professional advice for their particular situation. Neither Manulife Investment Management nor any of its affiliates or representatives, collectively manual life investment management is providing tax investment or legal advice.