Good With Money is running an alternative advent, which means that every day until Christmas, we feature a post by one expert, about one investment that can help the world to meet one of the UN Sustainable Development Goals.
Today, John Fleetwood, founder of 3D Investing and author of the Good Investment Review, focuses on investing to solve clean water and sanitation.
Water and sanitation are at the very core of sustainable development, critical to the survival of people and the planet. Indeed water has been called the ‘new carbon’, with many companies reporting on their efforts to reduce their water consumption, reflecting that clean water is a precious and scarce resource. SDG 6, clean water and sanitation, not only addresses the issues relating to drinking water, sanitation and hygiene, but also the quality and sustainability of water resources worldwide. This applies to developed countries as well as less developed areas of the world, since ageing infrastructure is in urgent need of renewal.
Water presents an attractive long term opportunity for investors.
Increasing urbanisation, a chronic lack of sanitation infrastructure in the developing world, rising privatisation, and ever increasing demand from agriculture, industry and municipalities have all put pressure on scarce clean water resources.
In turn this provides a very strong driver for the water industry over many decades. It is not surprising, therefore, that water has become a popular investment theme. Many of the thematic funds such as the WHEB Sustainability, Triodos Sustainable Pioneer and Impax Environmental Markets funds target water investments, but there are also six pure play water funds available for UK retail investors. These all have similar strategies but our preferred fund is the Pictet Water Fund.
Pictet is one of the pioneers of thematic investing and their water fund was the first of its type, dating back to 2000. Investment in water themes has been identified as one of the key macro strategies with the challenges of supply, ageing infrastructure and rapidly increasing demand creating strong tailwinds for stocks in the sector.
The fund’s objective is to invest worldwide in shares of companies focused on the water related sector. This is built on the belief that water presents an attractive long term opportunity for investors.
In practice, this means investing at least two-thirds of its total assets in the shares of companies operating in the water sector worldwide, although at an individual stock level, only 20 per cent of the revenues need to be derived from water related activities (in practice it is invariably much higher than this). These include water supply, processing services, water technology and environmental services.
Pictet is also committed to a sustainable approach in its’ internal operations and has a strong philanthropic tradition, exercised through its’ charitable foundation. ESG risks are also monitored to avoid ethical controversies. This fund is very proven, backed by substantial resources and has a four Star 3D Rating.
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