This summer, Lake Mead, the largest reservoir in the United States, is at its lowest level since engineers filled it in the 1930s, and Fidelity’s Janet Glazer says it’s starting to bring global water scarcity to the fore for some U.S. water consumers, government leaders, and investors for the first time.
“I think more people are realizing that access to fresh water is a growing global concern, and it’s likely going to require help from innovative, technology-focused companies to help prevent shortages in the coming decades,” says Glazer, portfolio manager of Fidelity® Water Sustainability Fund (FLOWX), which launched in April 2020.
Glazer, who has studied water-sustainability issues for years, says two-thirds of the world’s population lives without sufficient access to fresh water for at least one month of each year.
She believes three factors lie at the heart of the problem: insufficient infrastructure, booming populations, and climate change.
According to Glazer, stress on public budgets will make it unlikely for governments around the world to solve water-accessibility issues on their own. She says many already are turning to companies that provide new science, technologies, and intelligence-enabled solutions to address problems cost efficiently.
Some of the best companies committed to water access, she believes, have strong sustainability mandates that spell out how they treat people, manage their companies ethically, and plan to meet environmental goals.
For example, Glazer points to Roper Technologies (ROP), the fund’s second-largest holding as of midyear. She considers Roper’s Neptune Technology Group a leader in providing software and measurement systems that efficiently monitor water usage and help find system leaks. She notes the company serves more than 4,000 utilities across North America.
According to Glazer, only about 40% of water systems use intelligent monitoring systems, creating a large addressable market for Neptune in the coming years.
Glazer also points to Idex (IEX), another outsized fund position at the end of June. She says this company is a leading maker of pumps, valves, and flow meters for water and wastewater applications. She lauds the company’s management team for creating a decentralized structure and an entrepreneurial culture.
“Conservation efforts likely will be part of the solution going forward, but so will technologies that get water to customers more efficiently than ever before,” Glazer says. “I think I’ve found the companies that are leading the way in this regard and invested in them for the fund.”
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