With 70% of the global population expected to become urbanised by 2050, a growing middle class among developing nations is leading to increased demand for new products and manufacturing processes that utilise more water. The 2030 Water Resources Group report predicts that global demand for water will rise by 40%.
Ageing infrastructure leads to millions of gallons of water being lost every day. In certain areas of Europe leakages are as high as 50%. In the US the Environmental Protection Agency estimates that US$300bn needs to be spent on waste water improvements and US$335bn on the country's water utilities infrastructure over the next 20 years.
The water industry globally is estimated to be a US$500bn market and provides numerous growth opportunities. With demand increasing for a finite resource, a number of companies are positioned to benefit from the theme of water efficiency including Pentair and Xylem, in which we have invested. Pentair’s flow management solutions include flood control, water supply and disposal. Xylem is a water technology provider committed to sustainability. Earlier this year, for example, the company launched a human-powered ‘stepper’ irrigation pump for customers in developing markets and last year its pumps were put to use in New Jersey to drain flooded areas following Hurricane Sandy.
By investing in companies that provide water-efficiency benefits to consumers, businesses and governments, we gain exposure to a growing, sustainable theme that has the potential to provide attractive long-term returns for investors.
Nick Anderson and Hamish Chamberlayne, co-managers of the Henderson Global Care Growth Fund and the Henderson Institutional Global Care Managed Fund
These are fund manager views at the time of writing and may differ from those of other Henderson fund managers. The information should not be construed as investment advice. Before entering into an investment agreement please consult a professional investment adviser.
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