Fresh water has no substitute—and only a fraction of today's supply is safe for consumption. Given a fast-growing world population, the massive urbanization of developing nations and poor infrastructure in developed countries, the need for water is set to grow exponentially. Because of this global supply/demand imbalance, water is increasingly being viewed as a core commodity that could be as profitable as oil.
A Flood of Opportunity
||Water is currently a $500-billion market that could grow to as much as $1 trillion by 2020.¹
||Investments are needed along the entire water chain; water-infrastructure projects alone are expected to see annual growth of 5%-8%.¹
||Companies that focus on addressing the increasing demand for and limited supply of water could represent some of the world's key growth opportunities today—and in the coming years.
A hypothetical $1,000 investment in the S&P Global Water Index at inception
(11/16/2001) would have grown more than 290%—far outpacing broader stock-market indexes.
Source: Morningstar Direct. Data as of 9/30/13. Past performance is no guarantee of future results.
|S&P Global Water
|MSCI World Growth
The information above does not represent Allianz Fund performance. Please click here
for information concerning the AllianzGI Global Water Fund's performance
and investment process
Expanding the water supply
Global water demand will be pushed 40% beyond accessible, reliable supplies by 2030 unless significant headway is made toward resolving the global water crisis.²
Areas of Development:
We have identified three main areas where governments and private corporations will have to devote substantial
resources to help solve the growing water challenge. Each one provides a range of attractive
water-related investment opportunities.
Use the sliding displays below to explore each investment opportunity.
Increasing water-supply efficiency
1.1 billion people have inadequate access to water.³
Develop new water
infrastructure to create
a sustainable, reliable and
cost-efficient supply system
for developed and developing
- • Exploration costs, engineering and design
• Well drilling
• Runoff water-capturing facilities
• Pumping stations and pipelines
• Desalination equipment
• Wastewater treatment plants for reuse or discharge
• Construction materials
Improving water quality
32 billion cubic meters
of treated water is leaked
from water-supply systems
Create effective solutions
to reduce demand, lessen the
need for capital-intensive solutions
and promote sustainable
use of available resources
• Irrigation equipment to prevent evaporation of water in farming
• Meters to stop waste
• Drought-resistant crops or fertilizers
• Automation controls
• Leakage detection
80% of China's
rivers are too toxic for
fish—let alone human
Increase regulations on
drinking-water quality and
establish minimum levels
• Monitoring and testing
• Disinfection chemicals
• Sanitary appliances
• Wastewater technology
Why AllianzGI Global Water Fund
The team invests in companies facing the challenges of the increasing demand for—and limited supply of—clean water. You can't invest directly in water, so the portfolio managers invest in companies that are active in water management in sectors like industrials, utilities, construction, building materials, technology and chemicals. The portfolio managers typically aim to construct a concentrated portfolio of 25 to 50 stocks of high-quality companies with unique positions within the water-supply chain.
How this strategy can fit in a portfolio
||Stable, predictable growth potential in a low-growth environment. Water demand is a long-term secular growth story, generally unaffected by economic conditions, political developments or changing consumer preferences.
||A long-term, and potentially less-volatile play on growth in emerging-market economies. Water-infrastructure investment is a necessity for growth-related activities: generating electricity, growing agriculture, raising livestock, manufacturing and mining.
||Access to active management. The fund's active-management approach can be forward-looking, and can take a strategic view of the issues facing and shaping the industry—providing opportunities that passive indexing may not. Of course, passive investing
may involve lower fees and expenses, and it is possible for active portfolio
managers to negatively affect portfolio performance with their
Investors looking to capitalize on the water challenge may want to consider AllianzGI Global Water Fund, which seeks long-term capital appreciation from equity securities of water-related companies worldwide that have unique positions in the water-supply chain.
||Infographic: Rising Tide