Water as an Investment... Thirsty for more?

Most people consider water a necessity, rather than an interesting investment proposition. Here at fundgurus we have already written about Agriculture as an investment theme so thought it would be an opportune moment to also comment on water.

There are some very compelling trends supporting water and the two biggest are growing populations and thus an increase in demand, and second is the lack of a substitute for fresh water which should mean demand is always apparent. The global population is estimated to reach about 9bn by 2050, and with urbanisation and increase in standards of living individuals are demanding more fresh water. In order to meet this demand there needs to be significant investment in the water process and that should provide investment opportunities. These opportunities can be diverse both in terms of operations and geographical location. Utilities companies are probably what most people think of when they consider water investment and these companies should be able to provide sustainable cash flows, many linked to inflation and also often returning dividends to investors. The major risk to utilities is often considered to be regulatory as governments can impose sanctions so it is important to analyse these factors before investing. Other investments can be in water treatment, water waste and water infrastructure. 

So the investable universe for water is significant and with spending likely to increase to match global demand opportunities are likely to arise. It can be hard to select specific stocks so an investment fund maybe more suitable. Probably the most well known is Pictet Water which has great experience investing in water stocks.