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Achieving portfolio diversification through an island
Investors are well-versed in the importance of diversification, but one investor has taken this a step further and achieved diversification through the purchase of an Australian icon.
Achieving portfolio diversification through an island
Investors are well-versed in the importance of diversification, but one investor has taken this a step further and achieved diversification through the purchase of an Australian icon.
Investment fund Mayfair 101 recently announced its purchase of former tourism hotspot Dunk Island as well as entering a contract to purchase properties on the mainland as a way to diversify itself into the area of unlisted assets.
In a conversation with nestegg, managing direct of Mayfair 101 James Mawhinney has explained how he is achieving diversification and the extra benefits of the investment that will see wide-reaching impacts on the region.
“From personal experience many years ago, I made the mistake of not diversifying and putting all my eggs in one basket,” Mr Mawhinney prefaced.
“Admittedly, I learnt the hard way [that] diversification, regardless of how bullish you are about a particular investment, is needed.”
Despite having a portfolio spread across 10 countries, 10 sectors, five major currencies, and also investing in businesses at various stages in the life cycle, Mr Mawhinney’s investment team made the decision to move capital into unlisted assets.
“It’s part of our diversification strategy. We already have international real estate; we have fintech companies and businesses in emerging markets,” he said.
“Australian real estate and hospitality is just part of our strategy.”
Creating a ‘tourism Mecca’
Not only does the purchase of unlisted assets allow Mr Mawhinney to diversify Mayfair 101’s assets, it will allow the fund an opportunity for strong growth in the sector.
Mr Mawhinney believes his purchase of Dunk Island and Mission Beach will create a “tourism Mecca”, becoming a central hub in Asia Pacific.
To make it into the tourism Mecca, “you attract architects, restaurants, retail outlets and create a service level they can’t get elsewhere in Australia,” Mr Mawhinney said.
He’s compared it with Bali and Mykonos, where Australians go to avoid the winter.
For Mr Mawhinney, far north Queensland could offer a similar experience with stronger natural beauty.
Impact on the region
The fund finally noted the new assets not only benefit Mayfair 101 and its clients, but also the broader Australian economy.
It will allow for an Australian asset to remain in the hands of Australian business, while creating employment opportunities in the region.
An independent report has considered the flow-on effects of rejuvenating the closest island to the Great Barrier Reef would create $1.6 billion in investments as well as add 10,000 jobs to the area over the next decade.
nestegg has previously reported on Mayfair 101’s acquisition of Mission Beach assets and Dunk Island.
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