Tareno Global Water Solutions Fund in September

September is an important month for us as there are several opportunities to engage with companies from our universe. The Janney Water Utilities Conference provided valuable insights into American Waterworks, American States Water, California Water, York Water and Essential Utilities - all of which are important holdings in our fund. You can read about what else the month of September had in store for our Tareno Global Waterfund in this issue.

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September is an important month for us as there are several opportunities to engage with companies from our universe. The Janney Water Utilities Conference provided valuable insights into American Waterworks, American States Water, California Water, York Water and Essential Utilities - all of which are important holdings in our fund. You can read about what else the month of September had in store for our Tareno Global Waterfund in this issue.

Water Fund Report

September 2024

On a slow boat to China

September is traditionally a weak month for stock markets, and this year began no differently. However, markets quickly rebounded after the Federal Reserve delivered a 50-basis-point rate cut, exceeding the widely expected 25 basis points. Investors interpreted this as a positive signal: the economy is performing well, and the Fed’s action was aimed at maintaining this momentum without falling behind the curve. This move also opened the door for other central banks to reduce their rates, with China surprising the markets by introducing strong measures to bolster its stock market. Chinese equities surged significantly, and the positive impact was felt across global risk assets. In short, global stocks once again reached new highs.

The Tareno Global Water Solutions Fund delivered a solid performance of +2.02% in September and +18.45 for the year (W-EUR tranche).

Our month in water

September is an important month for us, with several opportunities to engage with companies within our universe. The “Janney Water Utilities Conference” provided valuable insights from American Waterworks, American States Water, California Water, York Water, and Essential Utilities—all key holdings in our fund. We initiated a new position in California Water in September and remain confident that the environment for this group is still favourable.

Weather conditions in the third quarter ensured ample water supply, reducing costs that had been burdensome in previous years. M&A activity will continue to support growth, though on a smaller scale. York Water, for instance, mentioned that it is specifically targeting smaller utilities struggling with capital constraints due to PFAS-related expenses.

PFAS (per- and polyfluoroalkyl substances) was a recurring theme in our discussions, as the water industry is at the forefront of efforts to remove these chemical compounds from ecosystems.

At the Kepler Cheuvreux Autumn Conference, we reconnected with several European companies in our portfolio. We reintroduced Aalberts to our fund after they provided a clear signal that their construction business has bottomed out and is poised for growth. Like in the US, PFAS was a hot topic, and we’d like to highlight Arcadis in particular. This Dutch company, operating in the environmental consulting sector, has a strong water platform built on three pillars: Water Optimization, focused on lead pipe replacement and stormwater infrastructure; PFAS management, concentrating on groundwater treatment and advisory support; and Climate Adaptation, helping governments protect water infrastructure from climate change. Despite shares being up over 30% this year, Arcadis still trades at a significant discount to peers like Tetra Tech or WSP, which we view as unjustified given the robust demand for their solutions from both public and private clients. Increasing government investment is expected to further support their market position.

All eyes on geopolitics

By the time our next newsletter reaches your inbox, we (hopefully) will know the next president of the United States. Until then, there is plenty of room for volatility, given the current geopolitical backdrop. With the upcoming earnings season in sight, we remain optimistic yet vigilant.

Best regards,

Stefan Schütz

 

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Would you like to learn more?

Do you have any questions about the report or would like to find out more about the Tareno Global Water Solutions Fund? Please do not hesitate to contact us.

Responsible

Stefan Schütz
Fund Manager
s.schuetz@tareno.ch

 

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