Brazil’s recent effort to upgrade its water and sewer infrastructure is being driven by legislation that mandates universal access to potable water and sewage collection and treatment by the end of 2033, according to Fidelity Portfolio Manager John Chow, who is drawn to what he considers compelling opportunities for investment.
“A key driver of our investment thesis in Brazil is the nation’s Basic Sanitation Legal Framework, as well as the deployment of private capital to improve the stark infrastructure gap, including significant regional disparity,” says Chow, who has managed Fidelity® Sustainable Emerging Markets Equity Fund (FSYJX) since its inception in 2022.
In helming the portfolio, Chow invests primarily in emerging-markets stocks that he believes have proven or improving sustainability practices based on an evaluation of such companies’ environmental, social and governance profile. He identifies the most compelling ESG investment ideas from Fidelity’s research platform, drawing on proprietary analyst ratings and research coverage portfolios, with a particular focus on companies demonstrating improving ESG trends that may not yet be reflected in major third-party ESG data providers’ assessments.
In Brazil, 83.1% of the population is served by a water supply network and 59.7% by a sewage collection network, while 49.4% of the sewage generated is treated, according to 2025 data from the country’s National Basic Sanitation Information System, Chow notes. Service levels are significantly lower in some regions, including the underdeveloped north, he adds.
In Chow’s view, utility company Sabesp is well-positioned to play an important role in upgrading Brazil’s water and sewer infrastructure following its historic privatization in July 2024. This transition transformed Latin America’s largest water and sewage utility from a state-controlled enterprise into a privately operated, publicly traded company.
In a key development, through the creation of the Regional Water and Sewage Unit (URAE 1 – Southeast), Sabesp consolidated 371 separate municipal agreements into a single unified contract. According to Chow, this landmark agreement standardizes operations and extends Sabesp’s concession terms to October 19, 2060, providing revenue visibility for decades to come.
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Notably, during its 2024–2025 cycle, Sabesp exceeded its performance targets, achieving 152% of its goal for new water customer connections and more than 130% of its objective for sewage collection and treatment units.
“I like that Sabesp is leveraging Nereda®, an advanced biological wastewater-purification technology developed by Netherlands-based Haskoning, to achieve its aggressive environmental and sewage universalization targets,” he explains.
In his view, Sabesp is a good example of a company with promising financial prospects underpinned by structural demand drivers. It also is playing an important role in significantly improving the environmental and social outcomes in a key emerging market.
“These characteristics make Sabesp a good fit with my focus on companies with strong fundamentals and proven or improving sustainability practices,” says Chow.
Another is Copasa, which Chow says has transitioned from a state-controlled utility into a privately managed corporation and derives virtually all its revenue from providing regulated water and wastewater services to about 12 million people in the Minas Gerais area of Brazil.
He likes Copasa’s attractive risk profile, predictable cash flow and compelling growth story as it goes through operational transformation. “Copasa is entering a massive sanitation-focused investment cycle that I believe should support rate-base expansion and higher service penetration,” he notes. “This gives the firm a powerful dual runway for potential earnings growth and valuation multiple expansion.”
For specific fund information, including full holdings, please click on the fund trading symbol above. Securities mentioned were fund investments as of July 31, 2026.
John Chow is a portfolio manager in the Equity division at Fidelity Investments.
A member of the Select Portfolio Management team since 2011, Mr. Chow serves as the lead manager of FIAM Select Emerging Markets strategy and Fidelity Series Emerging Markets Fund. He also manages Fidelity Sustainable Emerging Markets Equity Fund.
Prior to assuming his current responsibilities, Mr. Chow managed several U.S.-focused institutional equity portfolios. Additionally, he contributed to strategy formulation for, and management of, U.S. equity portfolios for institutional clients, blending Fidelity fundamental research with quantitative inputs, and managed the equity portion of Fidelity Asset Manager Income Fund. During his tenure, Mr. Chow also managed Canadian equity portfolios available exclusively to Canadian investors. He joined Fidelity as a member of the Quantitative Equity group in 1994, where he developed quantitative stock selection models for U.S. and international markets.
Mr. Chow earned his bachelor of science degree in computer engineering from the Massachusetts Institute of Technology (MIT). He is also a CFA® charterholder and a member of CFA Society Boston.