Investors can't afford to ignore food. As a hedge against a possible US recession, and direct exposure to rising urbanisation and wealth in Asia, it's an asset class that's tailor-made for the present times. As Jim Rogers of New York-based investment firm Rogers Holdings puts it, "If you're in agriculture, you don't know that there is a recession, you don't care.'' That may be as true for investors in agricultural commodities as it is for farmers, provided the former don't rely on the expertise of fund managers to beat the futures markets. The worldwide boom in agricultural commodities, fuelled partly by the growing use of food crops as alternative fuel and partly by soaring Asian demand, is proving to be a hard nut for professional money managers to crack. According to a report last week by Merrill Lynch commodity strategist Francisco Blanch and other analysts, many of the actively managed funds focused on agriculture are failing to outperform gauges such as the S&P GSCI Agriculture and Livestock Total Return Index, which, when tracked passively, returned an impressive 28 per cent last year. By comparison, the Barclay BTOP50 Index, which monitors the performance of the largest traders, gained 8 per cent in 2007. "The promise of generating total returns by investing in agricultural commodity-related instruments has up to now failed to significantly differentiate from passive rule-based indices,' the Merrill analysts noted. "Fund managers are likely to find increasing competition from low-cost rule-based investment strategies.'' Active versus passive For now, money is rushing toward a perception of competence, regardless of eventual performance. The "managed futures'' business already has about $190 billion under supervision, almost a fourfold gain since the beginning of 2003, according to Fairfield, Iowa-based Barclay Hedge, which researches the industry. But where is the compensation for investors for hiring the skilled fund managers, paying them hefty management charges (1.5 per cent of capital) and performance fees (a 20 per cent cut of profits)? Relatively inexpensive exchange-traded funds, which even retail investors can access, seem to be making more money.