"Water has always been a precious commodity for Australian farmers, and it’s becoming equally valuable to those investors who can understand the market’s complexities."
Adam Courtenay for intheblack.com

Lots has been written about the case for investing in water rights, particularly in the Murray Darling Basin. But how does it actually comparing to investing the ASX?

As they say, historical performance is not necessarily indicative of future performance. But it’s definitely interesting so we pulled together some data on both.

The result: it looks pretty good for water over the last 10 years, significantly outperforming the ASX (based on capital values only, not considering annual returns).

A few things stand out on the chart:

  1. The ASX hasn’t done all that much given the time period includes the GFC)
  2. Water entitlements (we’ve used Goulburn High Reliability Water Shares as a proxy) have been on an upward rollercoaster ride (due to a range of reasons)
  3. The rollercoaster for water is still going up
  4. There doesn’t appear to be much of a correlation in performance between the two – but you’d need to do more analysis on that.

Aither’s water price modelling platforms enable our clients to consider various scenarios and examine the potential future impacts on entitlement values in the future. With supply and demand rapidly changing, this information can help make better-informed decisions.

Disclaimer: this should not be considered investment advice!



This insight was written in response to the article ‘Water rights, trading and the new water barons’ by Adam Courtenay which first appeared on intheblack.com on 1 November 2017.