Tareno Global Water Solutions Fund in April: How we are naviga­ting trade conflicts

April Whiplash

Equity markets experi­enced a turbu­lent April as fears of a full-blown trade war dominated the headlines. The month began with a sharp global sell-off triggered by the United States’ sweeping tariff announce­ments, which wiped out trillions in market value within days. However, senti­ment improved mid-month when the U.S. softened its stance by pausing some tariffs and easing tensions with China. Despite the dramatic swings, major indices such as the S&P 500, NASDAQ, and MSCI World finished the month nearly unchanged.

European equities also strug­gled, ending the month slightly negative amid falling consumer confi­dence and ongoing political uncer­tainty. In contrast, Japan posted a modest gain, supported by a recovery in services.

Although volati­lity was high, markets proved resilient, demon­st­ra­ting that investor senti­ment can turn quickly, even in an uncer­tain environ­ment.

The Tareno Global Water Solutions Fund posted a ‑0.96% perfor­mance in April (W Euro Tranche).

Water compa­nies between resili­ence and restraint

In early April, I attended an investor confe­rence in Austria. The sharp impact of the so-called “Libera­tion Day” tariffs was clearly felt, even in the tranquil Vorarl­berg Alps. Encou­ra­gingly, many CEOs remained composed despite the market turmoil, giving me the sense that they were well prepared for a wide range of poten­tial scena­rios.

Topics such as nearsho­ring and govern­ment infras­truc­ture programs continue to support invest­ment in water techno­lo­gies, even though short-term senti­ment is clouded by broader uncer­tainty. Many compa­nies are currently cautious about new invest­ments. For now, this isn’t causing acute issues thanks to robust order books, but the situa­tion warrants close monito­ring. Conver­sa­tions with compa­nies such as Andritz and Wiener­berger revealed encou­ra­ging signs. Germany’s infras­truc­ture package could further boost senti­ment, and economic condi­tions in Eastern Europe are often described as surpri­singly resilient.

Our month in the water: These compa­nies impressed us in April

Earnings season is in full swing. There­fore, we would like to share some convin­cing reports:

Andritz exceeded expec­ta­tions with strong hydro and pulp order intake, which was a positive surprise. They confirmed their guidance and mentioned that they have not yet seen any tariff impact. We view Andritz as one of the most compel­ling stories in our portfolio.

A.O. Smith is naviga­ting tariffs by raising prices. Undoub­tedly, the pull-forward of demand helped Q1, but the valua­tion remains attrac­tive. China remains a drag for the time being, but things could change quickly if the govern­ment acts to stimu­late the economy.

Veralto beat Q1 expec­ta­tions, but the unchanged guidance was left as is. This may indicate conser­va­tism, which is not neces­s­a­rily a bad thing in the current environ­ment. Manage­ment was vague about tariffs, but it is assumed that pricing will offset them. M&A and resho­ring trends are poten­tial catalysts.

Pentair’s margins are expan­ding despite a soft top line. Pricing and changes in the supply chain offset the impact of tariffs. Solid execu­tion and internal impro­ve­ments are key positives in a volatile macro environ­ment.

Sector analysis: Who stands to gain and who stands to lose from the new trade policy?

Some industries are better positioned to withstand this turbu­lence. Microelec­tro­nics, pharmaceu­ti­cals, and data centers benefit from strong struc­tural demand and political alignment, making them attrac­tive despite current headwinds. Precious metals mining may also perform well, driven by investor uncer­tainty and poten­tial shifts in confi­dence away from U.S. Treasu­ries. Energy metals, such as copper, could gain ground as AI and electri­fi­ca­tion trends continue to advance; however, long lead times and capital inten­sity could cause delays. The food and beverage industry stands out as a relatively stable performer, as it is less tied to global trade cycles.

In contrast, tradi­tional heavy industries, such as steel, bulk chemicals, and textiles, may be under the most pressure. Their exposure to global trade, high capital inten­sity, and limited pricing power under new tariff regimes make them vulnerable. The uncon­ven­tional oil and gas sector may fare better than in past downturns due to lower invest­ment thres­holds; however, it still faces challenges.

For compa­nies provi­ding water techno­lo­gies to the public sector, the outlook is positive. Although project costs in the U.S. may rise further, utility invest­ments are largely non-discretio­nary and long overdue.

Water sector remains promi­sing – selec­tive invest­ment pays off

Our invest­ment process enables us to actively adjust our exposure toward compa­nies serving stronger end markets, helping us navigate uncer­tainty while focusing on oppor­tu­ni­ties.

While volati­lity in capital markets and geopo­li­tics warrants caution, we remain confi­dent in the long-term funda­men­tals of the water sector. Success will be defined by selec­ti­vity and resili­ence.