Water Funds on the Rise

 

Cities are growing and governments do not have the money for the necessary infrastructure projects while funds are looking for alternative investments.  The assets of funds focused on water and specialized water funds were approximately $24 billion in 2011 and are expected to increase to $50 billion by 2015.  By 2016 private sector investment will account for 30% of all investment in drinking water and waste water compared to 19% today.  Morningstar states that the top water-focused funds returned over 10% year-to-date compared to 6.4% for the MCI World Index.  The iShares Global Water Exchange Traded Fund has returned 17.6%.  Growth rates up to 20% per year could come from emerging markets such as Chinese water companies and desalinization.  Though the water sector can be politically charged and carries risk of expropriation, water performance is not linked as closely to overall economic growth as other infrastructure.

 

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Tags: Natural Resources ,Investment Industry ,Mature