Investing for water
- The fund seeks to increase the value of its assets over the medium term by investing in equities and/or equity equivalent securities issued by companies that conduct a significant part of their business in water and related or connected sectors.
- The fund has significant exposure to a single sector and is likely to be subject to a greater concentration risk and higher volatility than a more diversified investment.
- The fund has significant equity exposure. Risks of equity market may include significant fluctuations in prices, negative information about the issuer or market. Fluctuations are often amplified in the short term.
- The management company may at its discretion pay dividends out of the capital of the fund. Payment of dividends out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment. Any distributions involving payment of dividends out of the fund’s capital may result in an immediate reduction of the net asset value per share.
- The monthly distribution share classes will continue to distribute monthly dividends in periods when the fund has negative return, which will further reduce the net asset value of the fund.
- Investors should not solely rely on this document to make any investment decision. Please refer to the Hong Kong offering document for further information (including the risk factors) about the fund.
Exponential needs, pollution, chronic drought… All these elements obviously raise the question of access to water, a future thematic, for which we estimate needs will grow at 10% per year for the next 20 years.
Water, a major challenge in the coming decades
Demographic growth and improving living standards have resulted in water consumption doubling in the last 30 years throughout the world, whether for agriculture, industry or households. Water is a rare resource for which demand will continue to grow both in emerging and developed countries. The latter are faced with the obsolescence of their water treatment and supply infrastructure and will therefore have to make heavy investments. Agricultural production requires large quantities of water and the increase in consumption as the world’s population grows will lead to making water more expensive. Finally, climate change is causing both droughts and flooding to worsen and is increasing water scarcity. All these factors make water a major imperative as well as being catalysts for growth for the water sector over the long term.
What solutions do we have for water today?
Several initiatives need to be put in place to resolve the problems discussed above and to provide access to water for as many people as possible:
- equip emerging countries with modern water treatment and supply facilities
- cut down on the amount of water used in agricultural livestock and crop production
- make existing water conveyance networks more efficient to avoid water loss in older cities (such as London and Mexico) where the systems have become dilapidated
- improve waste water and sewage treatment
- limit pollution of the water tables
Companies active in these different water domains should therefore directly benefit from such initiatives.
Water, the source of all growth
Parvest Aqua is an equity fund invested in the stocks of international companies whose business is related to the water sector. This includes in particular: water treatment, saving and recycling technologies, the installation, maintenance and renovation of water conveyance networks, and water sanitation and decontamination. Such companies are prospering in both emerging and developed countries, and provide investors with a balanced mix of small capitalisation companies that are often innovative players, and large cap companies that are often well-established players.
A word from the fund manager
“An increasing number of (water-related) needs are showing up due to global warming and this should support the long-term performance of the fund’s asset class. The investment choices behind Parvest Aqua favour mid-cap technology and growth stocks; that’s what characterises this fund and makes it an attractive, value creation fund.”
Fund management team, Impax Asset Management
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