US experts see sovereign wealth fund as key for Australia

Australia would be well-advised to establish a sovereign wealth fund to take full advantage of the current resources boom and provide for the period thereafter, according to participants in a Money Management/Super Review roundtable conducted in New York today.

The Boston Company senior managing director of Global Core Equity, Sean Fitzgibbon, told the roundtable he believed Australia needed to be wary of the boom-bust cycle so commonly associated with commodities and put in place something that could act as a cushion in the down-times.

BNY Mellon global markets strategist Jack Malvey said he believed the establishment of a sovereign wealth fund by Australia made great sense, just as it had made great sense in Norway when it had sought to have an endowment fund established from its oil wealth.

Man Investments executive director Mark Enman said Australia needed to be conscious of the finite nature of commodities, just as Saudi Arabia needed to be conscious of running out of oil and spending all its money.

Standish global macro strategist and senior vice-president, Thomas Higgins said a sovereign wealth fund strategy made sense for Australia, as did the Government implementing tax changes.

He suggested the Government could provide tax incentives for investment in other areas so there was less reliance on commodities over the long haul.

"It would be good to foster some diversity in the economy, given the concentration of growth in that area (commodities)," Higgins said.

Money Management and Super Review will be publishing the full content of the roundtable in coming weeks.