Key Takeaway: Water is a valuable commodity with investment value for investors who want to diversify their portfolios by acquiring water-. Water may be a commodity that you don't think about much when it comes out of That means now is a great time to consider investing in water stocks since. Yet the prospect of shortages in the years ahead could make water a precious commodity. That represents an opportunity for investors. POSTPONED MATCHES BETTING RULES HOLDEM

But what about the demand? After all, if demand was to fall as well, a falling supply would not be a problem. Unfortunately, the opposite is the case. Researchers worldwide agree that the demand for water will only increase in the coming years. The graph below very clearly illustrates how the increasing consumption of freshwater is expected to continue in the next few years: Source: Our World in Data Why is the demand for water increasing so dramatically?

To answer this question, we need to understand what water is actually being used for. If we look at European countries, we can see that it is not, as is so often assumed, the water that households use directly i. Mainly, water is used for Agriculture and Electricity.

For 1 pint of beer, on the other hand, you only need litres of water, which is definitely the more climate — and water-friendly — option. In the next few years, the world population is said to grow from 7. And more people means more empty stomachs. Which means more agriculture — and, ultimately, more need for even more water.

In addition, a large proportion of people are getting richer, and with wealth comes over-consumption. While the average Chinese person consumed "only" 78 litres of water per day in , the average US person consumed litres of water per day.

So, naturally, the average US American could consume significantly more than the average Chinese. There are various studies that have confirmed that higher income goes hand in hand with higher water consumption e. Li et a. Worldwide, the global middle class is expected to reach 5. This means more than 2 billion people with more wants and purchasing power than today.

The future demand for water is therefore catalysed twice: Firstly, by the increasing world population and secondly, by the increasing capital that households worldwide have at their disposal. The water crisis: Millions of people at risk Another factor that influences the price of commodities — besides the supply and demand relationship we have just looked at — is their scarcity. Scarcity is what gives a commodity value, because if there were an infinite supply of a commodity, who would be willing to pay a lot of money for it?

The most typical example of scarcity is diamonds. Why are diamonds more expensive than stones? Yes, they sparkle when you cut them properly, but from an economic point of view, they are mainly more expensive because they are rarer. The scarcity principle applies to all goods and thus also to water. If water should unfortunately become scarcer in the next few years, this could therefore be a good investment opportunity. Two billion people already live in countries with water scarcity and these numbers are likely to increase in the coming years.

For example, England has announced that by , domestic demand could exceed supply by up to 3. For the rest of Europe, the situation is similar. Europe is running out of water For the rest of Europe, the situation is similar. From a value of 20, a country's water resources are considered to be at risk; from a value of 40, water use is considered to be unsustainable and supply is considered to be at extreme risk.

To prevent this and to ensure that people continue to have access to clean and sufficient water, many organisations now commit to water treatment and water efficiency. Water as an investment opportunity The imbalance between the supply and demand, the rising prices, the scarcity of water — all these factors make water a lucrative investment opportunity.

In principle, as an investor, you have various possibilities to invest in the water industry — just like in all other industries. For example, you can invest in individual shares of companies that are, for example, dealing with improving water efficiency i. These companies actively contribute to preventing water scarcity and will thus become extremely important in the future when the society will be trying to stop water shortages. If equities are not your thing, there are of course other ways to invest in water, such as ETFs that track water indices like the Dow Jones U.

Read this. Conclusion: Investing in water Water is arguably the most important resource on our planet and has gained more and more attention from the global community due to the potential imbalance of supply and demand and increasing water scarcity. It is extremely important that we solve our water challenges simply to be able to guarantee life on earth. This can be done through non-profit projects, but also by investing money in companies that are actively engaged in increasing water efficiency and water treatment.

Knowing how to invest in water is going to become a crucial skill for any investor who wants to diversify their portfolios. Yet, knowing why you should be investing in water is absolutely crucial if you want to make sense of the global challenges — and help solve them by investing your money in the right sector.

In addition, most of them work sustainably and meet high social and environmental standards. Our investment philosophy We look for companies with a solid business and sustainability and high IQ impact and quality , which operate successfully and are still relatively undervalued. Our focus is on companies that solve sustainable challenges such as water scarcity, water pollution and water supply with their products or services.

We are confident companies with a positive impact on a sustainability theme offer better potential returns. Investment process: How suitable equities are found Stock selection based on the bottom-up approach first involves analysing companies and then the sectors, markets or regions. The return on invested capital, fundamental data and environmental and social impact are all taken into account.

Investments are made in companies with a convincing business model, low debt levels, solid financial figures, a good management track record and a relatively high return on investment that promise above-average returns with below-average risk. Does this investment fund fit in with your investment philosophy? This thematic fund is suitable for investors who have a long-term investment horizon; wish to share in the performance of environmentally and socially responsible companies; are interested in high-growth opportunities in the long term and are prepared to accept large price fluctuations.

Three good reasons to choose us 1 Impact and quality: we create sustainable added value for you and for society by investing in the impact theme of water.

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Water as an investment Water is not only biologically necessary but also a huge component of every aspect of agriculture. For example, it takes 1. This pales in comparison to the water that is required for meat and produce: It takes gallons of water to produce one gallon of dairy milk and over 1, gallons of water to produce one pound of beef. Meanwhile, it takes bottles of water to produce just one bottle of wine, according to Burry.

While demand for agricultural products will increase as the population grows, potable water is steadily becoming scarcer. This dynamic of supply and demand is making the prospects of a water investment all the more lucrative. So, how does one invest in water as a commodity? There are many ways to gain exposure to water as a commodity, either through water-related assets or through water derivatives like funds and futures contracts.

One of the best ways to invest is to purchase stock in a water company. Water commodity stocks Water stocks are shares in any publicly traded company that provides water as a utility, packages water for retail sale to consumers, or owns rights to a natural water source. While it's rare to find a company that hasn't diversified beyond just water commodities, buying stock in companies with water-related assets on their balance sheet is a good way to gain exposure to water as a commodity.

The best water stocks are companies with broad commercial reach in the water market or firms that provide water for specific applications, such as medicine. Water commodity ETFs Another way to gain exposure to publicly traded water companies while curtailing risk is by buying shares in a water exchange-traded fund ETF. Water ETFs are great for hands-off investors since they are vigorously managed by firms that try to replicate water indices and maximize profit, but a downside of ETFs is that their expense ratios can cause their share price to become less correlated with the underlying assets.

Nevertheless, if you're looking for a simple way to add water companies to your portfolio, you may consider buying a water industry-focused ETF. Water commodity futures The final and most risky water investment strategy is buying water futures. Most high-volume natural clean water sources are exclusively owned by a company or government that may sell contracts to buy water at a set price by a certain date.

These are known as futures contracts and they're a common mechanism for trading commodities that don't exist yet. Buying water futures can be risky since they're basically a bet on the price of a commodity moving in a certain direction before they expire.

While water desalination and filtration could impact the price of water by increasing the available supply, consumer demand for spring water has allowed natural springs to remain lucrative real estate. Farmland The preferred water investment strategy by people like Burry and Bill Gates is buying farmland in particularly water-rich areas. If an event like drought drives up the price, the contract seller must make up the difference and vice versa if it drops.

This kind of speculative trading has long been done for commodities, such as gold or oil, but not for a life-sustaining resource such as water. Trading Water Its advocates claim that futures water trading could better align water supply and demand in the face of growing scarcity. Investors do not acquire water rights from municipalities or indigenous groups. What makes things even worse, says Sen, is that some of the people who profit from water scarcity are also profiting off of what's driving that scarcity to begin with.

For one thing, farmers are pretty risk adverse when it comes to financial outlays, says Mike Wade, executive director of the California Farm Water Association.

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So, how does one invest in water as a commodity? There are many ways to gain exposure to water as a commodity, either through water-related assets or through water derivatives like funds and futures contracts. One of the best ways to invest is to purchase stock in a water company. Water commodity stocks Water stocks are shares in any publicly traded company that provides water as a utility, packages water for retail sale to consumers, or owns rights to a natural water source.

While it's rare to find a company that hasn't diversified beyond just water commodities, buying stock in companies with water-related assets on their balance sheet is a good way to gain exposure to water as a commodity. The best water stocks are companies with broad commercial reach in the water market or firms that provide water for specific applications, such as medicine.

Water commodity ETFs Another way to gain exposure to publicly traded water companies while curtailing risk is by buying shares in a water exchange-traded fund ETF. Water ETFs are great for hands-off investors since they are vigorously managed by firms that try to replicate water indices and maximize profit, but a downside of ETFs is that their expense ratios can cause their share price to become less correlated with the underlying assets.

Nevertheless, if you're looking for a simple way to add water companies to your portfolio, you may consider buying a water industry-focused ETF. Water commodity futures The final and most risky water investment strategy is buying water futures. Most high-volume natural clean water sources are exclusively owned by a company or government that may sell contracts to buy water at a set price by a certain date.

These are known as futures contracts and they're a common mechanism for trading commodities that don't exist yet. Buying water futures can be risky since they're basically a bet on the price of a commodity moving in a certain direction before they expire. While water desalination and filtration could impact the price of water by increasing the available supply, consumer demand for spring water has allowed natural springs to remain lucrative real estate.

Farmland The preferred water investment strategy by people like Burry and Bill Gates is buying farmland in particularly water-rich areas. As mentioned before, one of the most important use cases of water is agriculture, particularly for foodstuffs like meat, seeds, nuts, as well as textiles like cotton. Water is a fundamental productive commodity that is the figurative fuel powering industrial agriculture, and companies have been acquiring rights to natural water sources for practically forever.

Obviously, not everyone has the resources to acquire vast swaths of hydrated soil like Burry and Gates. Though owning farmland may seem like a pipedream for most retail investors, alternative investment platforms like Harvest Returns and Acretrader have made it so that almost anyone can add farmland to their portfolio. If you're an accredited investor, Acretrader is a great way to profit from productive farmland.

Investors not only make money from rent paid by the farmers but also will profit from long-term land value appreciation. A state report predicts a nearly 15 percent decrease in water supply if the temperature rises 2 degrees Celsius, or 3. Now California almond farmers and electric utilities, both of which use massive amounts of water, can bet against the future availability of water.

If an event like drought drives up the price, the contract seller must make up the difference and vice versa if it drops. This kind of speculative trading has long been done for commodities, such as gold or oil, but not for a life-sustaining resource such as water. Trading Water Its advocates claim that futures water trading could better align water supply and demand in the face of growing scarcity.

Investors do not acquire water rights from municipalities or indigenous groups.

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