Water, uranium: funds brave the elements

Water and uranium themes run through three new funds coming to retail and wholesale markets.

Both the MFS Water Fund and the Liontamer Global Water Fund aim to exploit the higher value being placed on water by the public, and the global need for investment in dilapidated water infrastructure. The MFS fund is a fund-of-funds with six underlying water-specialist managers, five of whom adopt a long/short approach. The fund’s manager, Craig McIntosh, said investee companies would include those repairing existing infrastructure (including providers of trenchless pipe refurbishment) as well as builders of new technology like desalination plants. “We expect big growth in desalination…it’s very easy for politicians to get their head around building a factory, cutting a ribbon in front of TV cameras, and giving a city 30 per cent of its base load water requirement in one hit,” McIntosh said. The Liontamer fund, meanwhile, is a long-only fund from Belgium-based KBC Asset Management. Like the MFS fund it will run the gamut of water themes, including outsourcing of wastewater treatment by municipalities and the shift from chemical to non-chemical filtration techniques. The KBC fund has returned net 15.6 per cent in the five years to September 30, with the MFS fund targeting a similar number. Oceanic Asset Management, meanwhile, is confident nuclear energy will be the energy source of the future, and is launching a fund of uranium-exposed companies, which it plans to list on the ASX The fund believes now is the time to invest, following the political shifts around the world in support of nuclear power as the environmental impact of fossil fuels are becoming impossible to ignore. Thirty-one countries are currently operating 438 nuclear power reactors to generate 16 per cent of the world’s electricity, and Oceanic believes those figures are likely to increase dramatically. Another 30 reactors are currently under construction, most notably in China, India, Japan, Russia and South Korea, with 70 planned during the next 15 years and another 150 proposed. Years of low uranium prices have led to underdevelopment and divestment, but over the last five years the price has increased by 1000 percent. While it has been highly volatile, Oceanic believes the price will stabilise now at around $US90/pound, following the most recent corrections; there have been no major deposits discovered in the last two decades, and the gap between supply and demand is likely to widen. The World Nuclear Association forecasts reactor requirements to grow by 48 per cent by 2020.