Maybe it’s easier to list where Michael Underhill hasn’t lived. In the course of his interview with AdvisorOne at Schwab Impact 2012 in Chicago on Thursday, he mentioned his time in London, San Francisco, New York, San Diego and Denver. Which is curious, since Capital Innovations, the firm he started in 2007 with partner Susan Dambekaln, is located in the decidedly non-financial hub of Pewaukee, Wis.
His cosmopolitan experience means he doesn’t mince words.
“Some of my clients will tell me they’re looking for a 10% annual return with no risk,” he said. “I say, ‘great, it’s not the 1990s anymore.’”
But it’s not as if he isn’t finding alpha for his clients in the fund he manages. He just does it in very defined areas.
“We are a firm that is equity-based and invests in real assets; specifically timber, agriculture and infrastructure in the Capital Innovations Global Agri, Timber, Infrastructure Fund,” he explained further.
Calling infrastructure “wonderfully boring,” he noted that it doesn’t matter if people are “happy or sad or in an up or down market, they still have to flush the toilet,” which makes infrastructure so relevant.
In agriculture, he argued the planet will soon reach a population of 9 billion people.
“To feed that many people, we’ll need a 75% increase in the protein output. So we’re focused on companies that are able to increase crop yields.”
For instance, he pointed to an MLP play he’s in that invests in a company called Terra Nitrogen, which produces an alternative to potash. He said it’s more effective than potash with better economics.