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Basel boutique bets on water to keep returns flowing

Basel boutique bets on water to keep returns flowing

Though managers have had to navigate rough seas in 2018, Tareno research head Stefan Schütz believes water is a long-term investment that will keep returns afloat.

Schütz, who has co-managed the Tareno Global Water Solutions fund alongside his team since 2007, told Citywire Switzerland that water is unique because it is a closed-loop system.

He said: 'We are trying to make use of an imbalance between water supply and demand. There is the demand side, driven by population growth, urbanisation and climate change, and then there's a limited supply of water which has never changed. 

'Water is the only commodity that can neither be created or destroyed. There's no substitute, so the market is here to stay.'

Bringing back balance

Schütz also explained that the fund is not a commodity fund. Instead, it is an industrial, small- to mid-cap fund focusing on the technology and infrastructure needed to support water demand.

'The only way to bring back the balance between supply and demand is through technological change. We need systems that help us be as efficient as possible,' said Schütz, also noting that this approach can be frustrating, as new water technology typically moves at a glacial pace.

Choppy waters

Though Schütz believes water is an excellent long-term bet, he noted that the fund not necessarily a safe haven amid volatility.

'The investment universe is industrial, so there is cyclicality attached to it. It's small- and mid-cap, so not the best place to hide in a volatile market.'

However, despite the volatility risk, Schütz offers a compelling case for investing anyway.

'Nobody believes that population growth is going to end, that urbanisation is going to end, and just by looking out the window we can see climate change is there. It's all around us, and it's a theme that's going to keep us up at night for decades to come.'

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