Fund Manager Review November 2023

Roaring back
Thinking about a song that best describes the market action in November, “Roar” by Katy Perry might be a good choice. After the significant correction in October, stock markets experienced a strong rebound in November. Data releases broadly supported the view that central banks have reached the peak of their tightening cycles. The Fed noted at their November meeting that inflation appears to be slowing but left future interest rate hikes on the table should inflation turn less favorable again. As the US economy continues to show resiliency, their cautious approach seems appropriate. Nevertheless, the market started to price the likelihood of a rate cut in early 2024. As investors switched gear into risk-on mode, stock markets enjoyed their best month since the start of the year. Within the markets most relevant to us, the S&P500 rose the most (9.1%), followed by the MSCI Europe ex-UK (6.9%) and the Topix in Japan (5.4%).
The Tareno Global Water Solutions Fund posted its best monthly performance at +7.97% (W-Euro Tranche) in November.
Water fundamentals
Looking at the most relevant fundamental data, there are signs of a slowdown in demand in general. We are still in the “soft landing” camp, but we have to admit that in the phrase “soft landing”, you have the word “landing”.
While indicators for industrials point to a steady slide in manufacturing activity on both sides of the Atlantic, we still see niches that show resiliency. The reshoring trend is still ongoing and continues to be a major driver for companies selling water technology into the industry. The trend could even accelerate in 2024 depending on geopolitics.
Construction has been a weak spot throughout the year as elevated interest rates put the market under pressure. We continue to favor companies exposed to infrastructure and residential water treatment (Sika, Wienerberger, A.O. Smith).
Corn prices continue to tick lower well below their 2022 highs. This is weighing on the Farm Belt economy, which is the major end market for irrigation technology. Deere, a major supplier of ag-machinery sees double digit declines in equipment sales for 2024. This leads us to take a very cautious approach to this sector.
The bright spot is the municipal market. We are seeing improving activity in Water, Sewer and Waste projects. After lagging CPI during the post-Covid inflation spike, water prices are likely to outpace inflation again, which is a clear positive for utilities. We might add to this segment into year end, as the sector will be a beneficiary if rates effectively peak.
Our month in water
We attended Aquatech, an important trade show for water treatment in Amsterdam. This year’s edition was a successful and positive reunion of the global water sector welcoming 837 exhibitors and around 24’000 visitors. The event is a great opportunity for us to engage with representatives from many companies of our universe. The topics discussed the most were: The role of wastewater in the circular economy, technologies to address PFAS contamination, advancement in energy efficient desalination or harnessing A.I. and data analytics in water quality monitoring. We came away convinced, that the thematic of water has not lost any of its long-term appeal.
Spot-on ESG
We are delighted that our fund has been awarded the FNG label for the sixth time and this year even achieved the highest rating of three out of three possible stars. This award illustrates the great progress we have made in recent years at all levels of the sustainability process. We look forward to maintaining this high standard and keep pace with the constantly changing requirements in the area of sustainability.
Have a great holiday season ahead!
The typical Christmas dinner requires about 45’000 liters of water to produce with meat dominating the water footprint. Traditional favorites like French Fries and the various cookies (Katja’s fantastic Gingerbread) are adding to the total as well as beverages. Finally, everyone who has washed the dishes can attest to the water intensity of the work afterwards.
Beyond being a collection of fun facts, virtual water footprints highlight the long-term investment case behind water technologies. Enhancing efficiency of water usage in the industry, in agriculture and in households represents a real driver for investment.
Time is flying – this is already the last report of the year. 2023 was packed with challenges not easy to weather. Time now, to take a well deserved breather.
We would like to thank you for your continued loyalty with us and wish you a Merry Christmas and a Happy New Year!

Do you have any questions about the report or would like to find out more about the Tareno Global Water Solutions Fund?
We would be delighted to hear from you.
Disclaimer
This information is not intended as an offer or solicitation with respect to the purchase or sale of shares of the Variopartner SICAV-Tareno Global Water Solutions Fund. Please be aware that investment funds involve investment risks, including the possible loss of the principal amount invested. For a detailed description of the risks in relation to each share in the investment fund, please see the prospectus. Investments of the Luxemburg Variopartner SICAV-Tareno Global Water Solutions Fund should be made due to the fund’s latest prospectus, the statutes, the latest annual report and, if applicable, the half-yearly report. These documents are available free of charge from the domicile of the fund at 33, rue Gasperich, L-5826 Hesperange, Luxemburg, or from Vontobel Fonds Services AG, Dianastrasse 9. CH-8022 Zürich, Switzerland and Bank Vontobel AG, Zürich, Switzerland.
Bilder: Jürg Kaufmann, Marijke Vosmeer, Istock, Unsplash, Pixabay