This analysis is a peer-group study of all existing water public equity funds. It aims to shed light on the water investment theme, its funds, and its strategies. These funds invest in the water sector, a market of different industries serving the needs of our water infrastructures: Industrials, Healthcare, IT, and Utilities. The main finding of the study is that these funds have attractive risk-return profiles in the long term and this makes them ideally suited to become an asset class in their own right. Their relative-over performance and lower correlations to global markets help indeed increase a portfolio's performance and reduce its volatility over time. The analysis also shows a large heterogeneity in performance across funds, different sector positioning, and ways to integrate sustainability in their investment processes. Finally, the analysis discusses how water funds catalyze resources to support water-solving technologies and to contribute to sustainable development goals.

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You can find a sample version of the research published by the Swiss Water Partnership here.

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The full analysis includes:

• The funds' investment cases and universes.

• Funds' details (names, ID, fees, etc..).

• Risk-return profiles of all different funds

• Sectors' allocation and sustainability ratings of the funds.

• Macro perspective on the theme and contribution to sustainable developments.

Holy Water is a series of in-depth articles about the how, what, and why of investing in water. It takes the perspective of investors and shows why investing in water is investing in the future and how it offers multiple benefits. The six first chapters are already out and are published on LinkedIn:

 

I) Holy Water I: A Long Trend (the investment case of water).

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II) Holy Water II: A Place of its Own (its advantages in portfolio construction and income security).

 

III) Holy Water III: A Source of Value (the fundamental value opportunities in water investing).

 

IV) Holy Water IV: The New Testament (the new technologies and innovations in the water VC/PE space).

 

V) Holy Water V: A New World (study cases on new water and climate risks and how this affects investing).

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VI) Holy Water VI: The Fall of Giants (personal experience in contemplating the death of alpine glaciers).

White Stag Investing regularly write about climate and water risks on its LinkedIn feed. You can find a short selection below. If you are interested in a comprehensive package of such stories, my book Stories in #Water, #Sustainability and #Investing: How to approach the new investment landscape after climate change is available in the store.

 

1) Tesla laughed about the water situation for its new € 5 billion factory and now does not have enough water to run it.

 

2) Constellation Brands’ brewery got its water license revoked and is now left with $900 million of assets to scrap.

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3) California hydropower Utility does not have enough water to run its turbines.

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4) TSMC is running short of water to produce chips and has to resort to a costly solution.

 

5) Harvard's endowment fund: how investing in water rights might not be such a good idea.

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6) Greenflation, how climate change is set to reshape global supply-chain and harbour new levels of inflation.

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7) Climate change is changing the economics of insurance in Florida and is reshaping its market.

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This analysis screens every stock in the water sector and its associated industries. It compares their performance, volatility, valuations, market capitalisation and other financial metrics. It shows the wide dispersion in financial performance across water stocks and this also differs from sector to sector. The analysis shows that the water sector is an investment universe where investors can find new sources of alpha and diversification for their (sustainable) portfolios. It finally shows there is a potential to build a small and concentrated allocation for investors interested to design their own water allocation in their portfolios.

 

The analysis includes:

• Description of the water sector and all related industries.

• List of water stocks and start-ups with their financials and sustainable ratings.

• Financial and sustainable differentiation analysis across the universe.

• Top-Picks: the most promising assets that contribute to solving water challenges.

• Portfolio allocation of the best water stocks for a small and concentrated allocation to the water theme.

This market analysis covers the landscape of ESG funds and explains how they differ greatly in their approach to sustainability. It discusses the various type of strategies  (Thematic, ESG Value, ESG Integration, BIC, ESG Risk Premia, Exclusion, and Ethical Investing) and their differences. The analysis makes a short selection of the most genuine and promising funds from a universe of 400 and shows they have attractive risk-return profiles for investors. The analysis further provides examples of how the low correlations across these ESG themes allow for portfolio breadth and can increase diversification when considered together. It concludes how these funds contribute to fostering sustainability and drive on long-term value factors.

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The analysis includes:

• Funds' details (names, ID, fees, etc..) from the short selection.

• Risk-return profiles, correlations, and sustainability ratings of the funds.

• Portfolio construction and enhancement example with ESG Funds.

• Macro assessment of ESG long-term drivers and contributions to sustainable goals.

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An analysis of the financial resilience of the S&P 500 companies. The analysis discusses how financial soundness is a strong requirement for sustainability and for companies to be autonomous. Companies build financial resilience by managing their finances to serve their goals in the long-term and not by maximizing profits to investors in the short term. This value creation process is eventually more rewarding for both companies and investors. The analysis suggests a way to measure this through solvency, liquidity, innovation, and profitability measures. The analysis finally shows how financially resilient companies were a source of protection during the Covid-19 crisis.

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The analysis includes:

• Financial resilience insights.

• Measures to compute a resilience ratio.

• Performance charts of financially resilient companies during the Covid-19 Crisis.

• Top 10 resilient companies.

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