Thomas Schumann Capital serves traditional and socially responsible global investors.
“Water is currently a $500 billion global industry that could grow to as much as $1 trillion by 2020,” states Schumann. It goes without saying, then, that this is one industry that investors should keep their eyes on. Investment is needed along the entire water value chain, explains Schumann. And global water projects alone are expected to see annual growth of 5 to 8 percent. All told, “companies that focus on addressing the increasing demand for water represent some of the world’s key growth opportunities today… and in the coming years.”
It’s not the physical water that should be traded and owned by third parties, since it is a public good.
Schumann sees water risk as a key opportunity for investors and humanitarians. As some experts “tout water as the new gold,” Schumann sees investment opportunities that meet and exceed those presented by traditional gold investing. He explains, “it’s not the physical water that should be traded and owned by third parties, since it is a public good. Instead, it’s important to invest in the necessary infrastructure and technology to maintain high quality water.” With one person dying every six seconds due to water contamination, it’s a market that needs immediate consideration and rapid investment.
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China is a great example of these investment efforts. With around 80 percent of their water supply polluted, officials and industry experts have “taken drastic measures to protect their water and their economy.” While China is notable for its “rigour,” other countries are also expressing a keen interest in water security.
In 2016, the US hosted its first ever water summit, suggesting that they too are beginning to look at water security seriously. Water is a key element on their balance sheet, as the country begins to “redirect capital into projects and technologies to ensure water security.” The nation has a $1 trillion financing gap to upgrade their infrastructure – a necessary project, when you think of the hundreds of thousands of US residents don’t have direct access to clean drinking water.
All told, water security is a problem affecting the entire globe. For the past three years, the World Economic Form has identified water as the most important item in their agenda. Therefore, from China to the US, governments, organizations and companies across the world are unified in their focus on water security.
In literature announcing the launch, Schumann said the timing of the launch is to capi- talize on increased levels of privatization, which is set to grow as required investment in water and sanitation infrastructure hits $11.7 trillion by 2030.
‘In the next three to five years, the private sector is expected to account for 30% of water investments. Europe has already started to make the transition into privatization of water management, and the majority of services for the UK and France are handled by private operators.’
‘We believe this trend is likely to continue globally, which will have significant implica- tions for the investment landscape,’ the company said.
In addition, Schumann said water is a non-discretionary asset and also operates in a largely secular way. Therefore it offers long-term investment opportunities, while serving as an alternative to low-yielding bonds and volatile equity markets.
Water Security Fund is an actively managed specialist water fund focused on water and water-related global equities. Due to water and its investor interest being a global long-term theme, Water Security Fund’s strategy includes U.S. on and offshore and UCITS vehicles.
Further infos: watersecurityfund.com