The founder of the $870 Duxton Asset Management, Ed Peter has said Australia's agricultural water market was the most sophisticated in the world and its value had significant growth potential.
His views synchronised with his current attempt to raise $99 million for a new water entitlements fund to be listed on the Australian Securities Exchange, with the aim of expanding across the Murray Darling Basin.
"Australia is light years ahead on water trading than any other country and I suspect the US will follow," Mr Peter said.
"The only problem is that at $24 billion Australia's water market is too small."
The capital rising for the fund opened on August 11 with brokers such as Morgans filling their order books with retail investors.
The fund, to be known as Duxton Water, would hold a portfolio, diversified across water entitlement types, security classes and geographical regions within the Murray Darling Basin.
Mr Peter, who will be the lead portfolio manager and chairman, co-founded Duxton Asset Management.
Prior to forming Duxton in 2009, he was head of Deutsche Asset Management Asia Pacific and has had an exposure to the Australia water market since 1999.
Mr Peter said that the value of water was determined by its highest and best use. With projections for prices to rise, water values were expected to follow.
"Prices are at the bottom so there is a huge amount of upside for water. It will be a long-term slow move but it will happen."
The fund will purchase an existing portfolio for $38 million, largely from Duxton's current farms.
About 88.6 per cent or $33.7 million will be leased to related-party primary producers on a long-term basis.
