Water Shortages Means 44% Return for Impax’s Water Strategy
Impax Asset Management Group Plc (IPX), a London-based investor managing 1.8 billion pounds ($2.8 billion) in clean-energy funds, is taking a bigger stake in water-related companies as droughts reduce supplies.
Impax’s water strategy has produced a 44 percent return in the three years to July 31, more than double the 17 percent gain by the MSCI World Index and the 7.8 percent increase of the FTSE Environmental Opportunities All-Share Index. (EOAS)
“We are particularly interested in the water sector,” Chief Executive Officer Ian Simm said in an interview. “Over the past decade, we’ve seen a steady increase in the number of drought-related events around the world, and have been building up our water exposure accordingly.”
London-based Impax Asset Management Group Plc specializes in environmental markets. The value of assets under management in its water strategy have doubled to 220 million pounds currently from 112 million pounds at the end of 2008. Its biggest water investment is in Washington-based Danaher Corp. (DHR), which makes water disinfection and analysis technologies.
It also has shares in IDEX Corp., a Lake Forest, Illinois, maker of pumps, and in the water utility American Water Works Co. of Voorhees, New Jersey. There’s also a stake in Severn Trent Plc, an U.K. water utility, which Impax said is attractive because of a dividend yield of more than 4 percent and supportive government regulations.
Just outside the top 10 holdings is Hong Kong-based China Everbright International Ltd., which develops projects for waste water and water infrastructure. The Chinese government is increasingly a major investor in the sector, which Impax said underpins its growth prospects.
This summer the U.S. has experienced the worst drought in a generation. Water demand could rise by more than 50 percent over the next forty years as the world’s population increases by two billion, Pictet Asset Management Ltd., whose Geneva-based water fund manages $2.8 billion of assets, said in a March 2012 report.
Impax’s water strategy saw a return of 15 percent for the first three months of this year, according to a presentation made to investors on May 16.
That exceeded Impax’s broader strategies including the “Environmental Specialists” and “Environmental Leaders,” which returned 10 percent and 12 percent respectively in the quarter. That compares with an 8.8 percent gain in the MSCI World Index (MXWO) and a 9 percent increase for the FTSE Environmental index during the same period.
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