by Ralf Ferken, Euro on Sunday
IItaly is running out of water, Lombardy has already declared a state of emergency. In other countries, too, citizens have to be prepared for restrictions due to extreme heat. “Climate change is not least responsible for the lack of water,” says Stefan Schütz. He manages the Tareno Global Water Solutions Fund. The fund has returned 136 percent in ten years. Despite the current explosive nature of the water issue, the fund was unable to escape the sharp correction on the markets. Recently, however, the value of the portfolio has increased again. The fund promises good opportunities for long-term investors in particular. Water is increasingly becoming a scarce commodity. There is a growing need for technologies that help water be used more effectively.
€uro on Sunday: Mr. Schütz, is there an imbalance between supply and demand for water?
Stefan Schuetz: Yes, but the amount of water available hasn’t changed since there was water on Earth. We use water today, which consequently once flowed through the stomach of a dinosaur. But the demand is steadily increasing. Three main drivers are at work here: population growth, urbanization and climate change.
So we have to be much more economical with the resource?
Yes, but it is also important to develop technologies that help to use and pollute less water. In the commercialization of these technologies lies the value for investors turning to the water investment theme.
What are the investment criteria for the Tareno Global Water Solutions fund?
The companies in our universe must produce products that comply with the United Nations’ SDG6 (Social Development Goal). SDG6, in turn, focuses on the availability and sustainable management of water and sanitation for all. We have excluded trading in water as a raw material – springs, water rights and mineral water – from our investment universe.
How many companies does the investment universe include?
The investment universe is small and very heterogeneous. It includes around 200 companies that meet our criteria.
Can you name two companies as examples?
Well-known names include the pipeline manufacturer Georg Fischer and the water supplier Severn Trent from Great Britain.
Does the fund generally focus on mid-cap stocks?
Yes, we invest primarily in small and medium-sized companies. Over the long term, the fund is more growth-oriented. However, we currently prefer a more defensive stance for the fund. The fact that the investment universe includes both cyclical and defensive companies is helpful in the current market situation.
The Tareno Global Water Solutions Fund still lost. What are the reasons?
We invest in listed companies. As a result, our fund cannot escape the fluctuations of the overall market.
Will the volatility persist?
Yes, the fluctuations in the markets remain high. In recent months we have shifted more into defensive segments of the investment universe. Mainly in water utilities. In addition, we see a positive environment for companies that offer irrigation technologies due to the high prices for agricultural commodities. We have greatly expanded our investments in this segment.
How does the Tareno Global Water Solutions Fund differ from comparable funds or exchange traded funds?
The main difference lies in the definition of water dependency. Every provider has its own philosophy here, which the investor must familiarize himself with. When it comes to sustainability, we certainly differentiate ourselves with our Impact share class for institutional investors. We give part of the management fees to partners who build water treatment plants in regions of the world that are particularly affected by water stress. Institutional investors can thus make a measurable contribution to the Social Development Goal.
Tareno Gl. WaterSolution:The investment theme of water is gaining in importance. Clear universe of defensive stocks and growth stocks. For long-term investors.
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Image sources: Istockphoto
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