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Alternative Market Briefing

Rainwater and Blue Sky - an Australian water fund emerges

Wednesday, April 23, 2014

Bailey McCann, Opalesque New York:

Financial reporters often tout new funds and investments as uncorrelated investments, but few can say they are uncorrelated to everything but weather. Enter Blue Sky Alternative's water fund which invests in the permanent rights to Australia's water. Several years ago, the Aussie government realized that given the scarcity of water on the continent, concrete steps would have to be taken to manage how that resource is used. Officials created a fully regulated, transparent system in which local residents and farms alike have their water titled separately from the land it is on. This enables tight resource monitoring and also created an instant competitive market for people to buy and sell excess reserves.

Blue Sky Water Fund is a player in that market, and facilitates some of those transactions and trades. The fund itself hits an interesting nexus point between a real assets play, a commodities play, and a hedge. "This is truly an uncorrelated investment, it is uncorrelated to everything except the weather," says Debra Goundrey, Managing Director, Blue Sky Alternatives in an interview with Opalesque.

Blue Sky focuses on opportunities in the Murray-Darling Basin. Water in the basin accounts for nearly 40% of Australia's agricultural output, making it an active commodities and water market. The entitlements system also makes it a transparent one. In addition to rainwater, several rivers flow into the basin, and local farm......................

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