Investing in the water theme

Well aware that fresh water is a precious and increasingly limited resource, water companies and governments are pouring billions of dollars into new infrastructure. This makes the sector an interesting proposition for investors seeking to capitalise on this inflow of money. Clare Dickinson reports

Diversification has been a key theme to emerge from the financial crisis. As any savvy investor now knows, uncorrelated asset classes are one way to help protect a portfolio from market crashes. Water could provide just such a tool, having seen good historical performance despite the crisis.

But water remains a niche investment that does not fit into other themes, thus limiting the investment amounts available. There is a conflict of opinion about whether it is a rapidly growing asset class or