Despite being the world’s most important resource, water remains a niche investment dominated by a couple of big fish.

It is often overlooked as performance is steady but unremarkable.

However, in a world of asset correlation, a drip-drip of returns looks good. The market is slowly filling up, with more groups joining in to quench investors’ thirst for these funds.

As a result, it is one of the few categories to have taken in money over the past month, quarter, nine months and 12 months.

Amplify observations

• Pictet has an enormous 31% market share with its $8bn Water fund. The group has benefited from its early arrival to thematic investing and to this sector. The fund’s performance has been squarely in the middle of the pack over the past three years, but that has not stopped it from taking in $500m over the past 12 months.
• BNP Paribas is the next-biggest group, with 25% of the market across its Luxembourg- and France-domiciled funds. Its performance here has been a little stronger than Pictet’s. In terms of flows, while the Luxembourg version has taken in new money to the tune of $230m, the French vehicle sits at the bottom of the peer group, losing $530m.
• The most sparkling strategy in terms of flows and performance has to be the $3.2bn RobecoSAM Sustainable Water Equities fund. The portfolio is fourth in the peer group for three-year returns. It has also managed to take in $770m over the past year, comfortably ahead of second-placed Pictet.
• Two funds that deserve to have made more of a splash are KBI Water ($900m) and Thematics Water ($250m). KBI Global Investors’ Water fund tops the peer group over three years with returns of 39.2% and is second in the category over the past year. Yet it has seen net redemptions to the tune of $180m. Thematics Water is also a good performer, but that too has had net outflows: $50m.
• There is an emerging trend of blending together water and waste, to create a more (ahem) liquid universe of stocks. This was pioneered by Fidelity and has proven extremely popular with investors. Its fund took in $200m over a year; with a further $130m streaming into the recently launched Regnan Sustainable Water and Waste fund – incidentally started by the same manager, Bertrand Lecourt. However, returns for Fidelity have been lacklustre, with the fund just 3.4% up over three years, following a poor year with the fund down 27.5%.
• To illustrate the sector’s growth, 20% of the funds in the sector were launched in the past year.