Stockholm (NordSIP) – Although two-thirds of our planet is covered in water, the themes of water and water treatment often takes a back seat to CO2 emissions when it comes to sustainable investments. Nevertheless, communities living in close proximity to the coast and to rivers are some of those most likely to be affected by global warming. Basic water treatment is also a fundamental part of public health policy and a guarantor of the basic living conditions necessary for the sustainable development of communities.
In line with these considerations, the Fidelity Sustainable Water & Waste strategy will soon be available for investment on Danske Bank’s platform. The strategy is managed by Velislava Dimitrova and Cornelia Furse, portfolio managers at Fidelity International.
“We want to give our end-clients the opportunity to invest in sectors and themes focusing on ESG,” Susanne Bolin Gärtner (pictured left), Head of Product Management & Selection at Danske Bank, tells NordSIP. “The water and waste themes are attractive as demand for clean water and more efficient waste management is growing at an enormous pace and on a long-term basis.”
“Total global water consumption until 2050 will increase by approximately 55%, particularly due to the soaring demand from the manufacturing sector,” adds Richard Bentefour (pictured right), Head of Marketing North Region, Continental Europe at Fidelity International.
“With more and more people migrating into the cities, the need for water supply infrastructure is soaring, particularly in the metropolitan areas and megacities. Utilities and waste disposal companies can profit from investments worth billions,” continues Martin Friis (pictured middle) at Fidelity International, who led the process from the firm’s Copenhagen base.
The strategy invests in global companies that operate in the design, manufacture or sale of products and services used in the water and waste management sectors. The strategy seeks to take advantage of major global trends such as population growth, environmental constraints, supporting regulations, the degree of urbanization and global wealth creation. The fund strives to integrate ESG issues into its investment and risk monitoring processes.
As to the reason for choosing Fidelity as a manager on this particular theme, Bolin Gärnter adds: “The portfolio managers have demonstrated expertise and success in managing sustainable thematic products and they bring an extra layer to the already high sustainable focus of the strategy while continuing to deliver solid performance. Today, we already offer a water fund from another manager but have now added the Fidelity fund as it also focuses on waste.”
“Fidelity Water and Waste Fund includes the waste management industry into the investment universe which not many other thematic ‘water’ strategies are doing. This combination creates interesting investment solutions both from an opportunity and a risk perspective,” Friis says, highlighting the appeal of this thematic focus.
When selecting thematic strategies, the definition of the fund’s focus is crucial. “The most important criteria to watch out for is the objective of the fund and what kind of companies they invest in, for eg solution companies or ‘plain water companies’,” says Bolin Gärtner. “The storytelling, as well as the closeness to research analysts to deliver innovative and sustainable strategies in the environmental and climate space, is also something we pay attention to.”
Since its launch in November 2018, the Fidelity Sustainable Water & Waste fund has attracted strong investor interest and manages US$1.981 billion in assets as of the end of March 2021. Holdings include American Water Works Co Inc, Entegris Inc Aalberts NV, Interpump Group SPA and Siemens AG, among others. The fund invests in industrial companies, social benefit, rare purchase goods, IT and basic industry among other sectors. Almost two-thirds of the funds are invested in the USA, followed by Japan, the Netherlands, France, the UK and China, among others. In the 12 months to March 31st, 2021, the strategy returned 50.2% in accumulating US dollar terms.
“Sustainable investing has been a key priority for Fidelity International in the Nordic region for many years. We see a growing demand from clients across all countries for sustainable investments solutions,” Bentefour concludes.
Picture credit: Danske Bank / Fidelity / NordSIP