How to invest in water, for #WorldWaterDay

Written by Rebecca O'Connor on 22nd March 2016

john-ditchfield

Inspired by UN World Water Day? Water solutions can be a compelling investment prospect. It’s a vital but increasingly strained and in-demand resource, and it requires a lot of work before it can be made drinkable. Here are two of our experts’ picks for top water investment options:

John Ditchfield, of Castlefield, the ethical IFA, says: “Water is absolutely essential for human life and prosperity. It is used in the vast majority of industrial processes; from making plastic to the garment industry and power generation, almost everything we do in industrialised society consumes water. And for this reason there has been considerable interest for many years now in how investors can gain exposure to water as an investment theme.

“There are a good number of active investment funds following this theme as well as tracking products such as the Guggenheim Global Water ETF. These funds work by investing into companies involved in water infrastructure, pollution control and in some cases desalination.

“And overtime it has been a profitable thematic investment style with the Guggenheim ETF beating the FTSE All Share over five years now.”

DSC03062

John Fleetwood, director, 3D Investing, the social investment researcher, says: “My picks would be the pure play water funds.  Both Pictet and Robeco SAM also apply sustainability screens so I’d go for their water funds.  These invest in water supply, technology and environmental services, so provide broad exposure to companies enabling the provision of clean water, whilst also assessing sustainability issues.

“I’d also consider the iShares Global Water fund which is a low cost tracker fund.  Although it doesn’t have any sustainability criteria, by its very nature, it invests in very similar types of companies and constitutes a low cost way of accessing the sector.  The Lyxor World Water Fund is another index tracker that invests in a basket of 20 shares, but I’m not so keen on the added risk and complexity of using performance swaps. “