“This decision was based on our long-held conviction that structural drivers in the marketplace will increase demand for water as a scarce commodity. Water has a low correlation to listed equities and, alongside our hedge fund, it is the most liquid asset in the portfolio,” Mr McNab said.

Nearly 13 per cent was invested in Blue Sky Investment Science IS 16Q hedge fund, which has returned 15.02 per cent per annum since inception in 2007.

“This provides a good balance with the private equity, venture capital and private real estate investments, which traditionally see higher returns but have low liquidity and a higher degree of correlation to the business cycle,” Mr McNab said.

Blue Sky Private Equity and Venture Capital funds have returned 16.3 per cent net of fees since inception as at 31 March 2014, while the Private Real Estate division has returned 16.7 per cent net of fees since inception to investors in its funds as at 31 March 2014.

Alternatives are the fastest growing asset class in Australia, increasing from five per cent of all investments in 1997 to 17 per cent at March 2014. Over the last 12 months alone, allocations to alternatives have grown 27 per cent[2].

“The Alternatives Access Fund is a unique opportunity for Australian investors to diversify their portfolios in line with global trends,” Mr McNab said.

Nearly a third (31%) of the Listed Investment Company’s (LIC) capital is yet to be committed. Mr McNab indicated that it was likely to be used to proportionately increase the allocation to private equity and real estate asset classes as opportunities arise.

“There is a growing appetite for alternatives in Australia, and in fact globally. The Blue Sky Alternatives Access Fund gives financial planning, private wealth, SMSF and retail investors the ability to invest in alternative assets through an ASX-listed structure that is more readily accessible and liquid than many alternative assets,” Mr McNab said.

The Listed Investment Company’s (LIC) allocation breakdown is as follows:

• $15 million in the Blue Sky Water Fund, investing in a diversified portfolio of agricultural water entitlements.
• $7.5 million in Blue Sky Investment Science’s high-performing IS 16Q quantitatively-driven hedge fund. The IS16Q fund operates in highly liquid equity, commodity, fixed income and currency markets.
• $4.4 million in the new Blue Sky Agriculture Fund investing in farmland and ground water.
• $4 million in private equity to Foundation Early Learning to fund the acquisition of 15 childcare centres.
• $4 million in Blue Sky Venture Capital’s newly launched VC2014 fund to capitalise on Australia’s underpenetrated VC asset class.
• $2 million in private equity to artisan and specialty bread manufacturer Wild Breads to fund growth.
• $2 million across two of Blue Sky Private Real Estate’s residential developments in up and coming inner-city Brisbane suburbs.

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