Water sector remains stable – oppor­tu­ni­ties despite global uncer­tain­ties

“Standing Strong” – Stocks defy the turbu­lence

June brought considerable turmoil to the markets. While falling infla­tion and robust labor markets in the US and Europe provided some stabi­lity, the outlook for central banks – parti­cu­larly the Fed – remained unclear. Mixed economic signals from China further dampened senti­ment and weighed on commo­dity prices and emerging markets. A 90-day truce in the US-China trade dispute briefly brigh­tened the mood, but doubts about its sustaina­bi­lity remained. The escala­ting conflict between Iran and Israel triggered a flight to safe havens such as gold and US govern­ment bonds.

Despite all the challenges, however, the stock markets remained stable and did not come under any signi­fi­cant selling pressure.

The Tareno Global Water Solutions Fund achieved a perfor­mance of ‑0.57% (W‑EUR) in June.

The perfor­mance

This is how the Tareno Global Water Solutions Fund has performed since its launch. Total return since fund incep­tion up to 30.06.2025:

Regula­tion in focus: data centers, PFAS, and Europe’s window of oppor­tu­nity

In Europe, the EU called on member states to accele­rate water projects financed by recons­truc­tion aid, which is set to expire in 2026. Despite incre­a­sing droughts and infras­truc­ture needs, only about 3% of recons­truc­tion aid funds are currently flowing into the water sector. Spain and Cyprus are among the few count­ries pushing ahead with their efforts.

In the US, the PERMIT Act has been pushed through Congress. It aims to relax the Clean Water Act’s requi­re­ments for infras­truc­ture projects. Meanwhile, states such as Virginia are arguing about the water consump­tion of data centers. The first districts are now requi­ring opera­tors to provide formal proof from a utility company that suffi­cient water is available – a sign that local autho­ri­ties are stepping in where federal regula­tions are lagging behind.

PFAS also remains a hot topic: The EPA’s planned limits are driving innova­tion: Veolia, for example, has unveiled its Drop® system for the near-complete destruc­tion of PFAS – a techno­logy that could play a central role in remedia­tion strate­gies.

In Japan, a new 20 trillion yen infras­truc­ture plan aims to improve water resili­ence follo­wing the high-profile supply disrup­tions and flooding. Globally, water infras­truc­ture is becoming a top priority – and an invest­ment theme.

Municipal sector on the upswing, industry mixed, agricul­ture under pressure

Municipal demand remains stable. Water utili­ties report steady invest­ment in the moder­nization of distri­bu­tion and treat­ment. Infras­truc­ture projects are provi­ding additional support for demand.

Demand from industry is mixed. While data centers and semicon­ductor facto­ries are a rapidly growing market for water techno­lo­gies, the manufac­tu­ring industry as a whole is in a phase of cautious invest­ment.

The market for water techno­lo­gies in the construc­tion sector (e.g., piping, sewage treat­ment plants) remains stable. However, tradi­tional residen­tial construc­tion and the market for commer­cial sanitary facili­ties are showing signs of weakness.

The market for irriga­tion techno­lo­gies is weak. Corn prices in the US have fallen, and farmers are holding back on invest­ments in machi­nery.

Company highlights: Veralto, GF, Webuild, Xylem, and more

• Veralto (Hach, Trojan) excels with quality analysis and UV filtra­tion devices. The state of Texas recently passed a strict food labeling law (SB25) that is likely to boost Veral­to’s product identi­fi­ca­tion business.
• Xylem is a leader in the instal­la­tion of PFAS treat­ment systems and is expan­ding its digital offering with AI-based leak detec­tion systems.
• Veolia impressed with its Drop® reactor techno­logy for PFAS destruc­tion and opened one of the largest PFAS treat­ment plants in the US.
• Georg Fischer has taken an important step toward becoming a pure flow solutions company. The sale of its machine tools division was completed at the end of June.
• Webuild/Fisia has launched Latin Ameri­ca’s largest waste­water project in Buenos Aires, which will treat water for more than 4 million people – impres­sive proof of the company’s positio­ning in the water sector.
• Itron (+11% in June) is seeing high demand for its metering systems from utili­ties. The stock also benefited from positive comments from analysts.

Conclu­sion: Stably positioned for upcoming market oppor­tu­ni­ties

Summer has only just begun, and already we are hearing reports of supply bottlen­ecks and infras­truc­ture disrup­tions caused by water shortages across Europe. We have taken advan­tage of the positive market perfor­mance in recent weeks to make our portfolio slightly more defen­sive. The reporting season, which begins in July, is likely to bring volati­lity and will certainly present some buying oppor­tu­ni­ties. For this reason, we currently feel comfor­table with a slightly higher cash position.