"Water industry automation promises substantial financial benefits"
In the ever-evolving world of finance, a significant shift is taking place as investors increasingly turn their attention to targeted water investments, particularly in emerging markets. One such fund leading this change is the KBI Water Fund, which has been making waves since its inception in 2008 (ISIN: IE00B2Q0L939).
The KBI Water Fund invests in companies that offer innovative solutions to address pressing water problems, from sustainable water supply and wastewater treatment to filtration and treatment solutions for harmful contaminants such as PFAS. This focus on water-related issues is rooted in the fund's recognition of the critical role water plays in our lives and its increasing demand due to population growth, business needs, and consumer demands.
However, gathering information for Environmental, Social, and Governance (ESG) scoring in emerging markets can be challenging. Nevertheless, dialogue with management plays a crucial role in obtaining this information. The fund encourages companies to increase their transparency and improve corporate governance, often lacking in these markets.
The KBI Water Fund maintains a concentrated portfolio of 40 to 50 stocks, focusing on small to medium-sized companies that are often undervalued and generate at least 50% of their revenues from water-related activities. The fund also sees potential in digitalizing water infrastructure, investing in companies that utilize "smart water" and digital technologies for water infrastructure.
Investors in the KBI Water Fund benefit from access to infrastructure investments in a liquid form, a significant advantage in the often politically and technologically challenging environments of emerging markets. Moreover, the fund's emphasis on sustainable thematic investing is gaining traction, fuelled by the growing sustainability trend among investors.
The surge in interest in the water sector is driven by a confluence of factors, including acute water scarcity, growing public awareness fueled by influencer-driven philanthropy, declining technology costs, and rising opportunities for scalable, impact-focused projects aligned with ESG goals. These investments contrast with traditional strategies by emphasizing measurable social outcomes, leveraging partnerships to reduce risks, and utilizing innovative financial instruments like social bonds and impact bonds tailored to water infrastructure and technologies.
In regions like Sub-Saharan Africa and South Asia, where water scarcity is particularly acute, investments in decentralized and sustainable solutions like solar-powered wells, rainwater harvesting, and advanced water treatment technologies are making a significant impact. The fund's active engagement with companies to improve corporate governance also contributes to the long-term sustainability of these projects.
In conclusion, the KBI Water Fund represents a strategic shift in investment strategies, combining financial returns with measurable social impact. This approach contrasts with more traditional infrastructure investments that often do not explicitly integrate such impact considerations or rely heavily on large-scale, centralized projects. As the world grapples with water scarcity and the need for sustainable solutions, funds like the KBI Water Fund are leading the charge, offering investors the opportunity to make a difference while securing their financial future.
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- Amidst the evolving landscape of finance, the KBI Water Fund, a pioneer in water investments since 2008 (ISIN: IE00B2Q0L939), also invests in technology-driven companies that digitize water infrastructure through "smart water" and digital technologies.
- Although gathering ESG data can be challenging in emerging markets, the KBI Water Fund values dialogue with management, encouraging enhanced transparency and improved corporate governance in these markets.
- With investor interest in both finance and sustainable water solutions on the rise, the KBI Water Fund embraces a unique strategy focused on real-estate and data-and-cloud-computing technologies that offer scalable, impact-focused projects in water infrastructure and treatments, particularly in regions like Sub-Saharan Africa and South Asia.
