Freshwater: A dwindling supply and growing demand
Source: “The Water Problem,” Zulfiquer Ahmed Amin, Global Policy Forum, October 8, 2007.
Although over two-thirds of the earth is covered in water, 97% of it is salt water. Only 3% is freshwater. Of the world's small supply of this precious resource, less than 1% is available for human consumption. Yet the demand for freshwater is growing twice as fast as the global population.
The United Nations estimates that human consumption of water increased sixfold in the 20th century, while the population itself only tripled.1
As if freshwater isn't scarce enough, much of it is wasted due to aging infrastructure. In the United States, up to 20% is lost to leakage. It is estimated that replacing the U.S. water infrastructure would cost between $300 billion and $1 trillion. And, at the current rate of investment, it would take 900 years to get the job done.2
The problem affects more than just drinking water. In northwest China, for example, factories have closed because there isn't enough water to operate them. Chinese government economists estimate that this and other environmental challenges generally shave 10% off the country's gross domestic product every year.3
Worldwide, governments and industry alike increasingly recognize that improving the water infrastructure will be critical to solving the global water crisis. In fact, over the next five years, investment in water infrastructure, wastewater treatment, desalination, and recycling is expected to rise steadily, as shown in the chart below.
An increase in infrastructure spending and a confluence of other issues—a finite supply of freshwater, global population growth, the modernization of developing populations, and the need for technology to maximize water supplies—make water a critical area for resource development and a potential area of significant investment opportunity.
1. World Water Council, www.worldwatercouncil.org/index.php&id=252.
2. Goldman Sachs, March 24, 2008, Americas: Multi-Industry report: “The Essentials of Investing in the Water Sector; version 2.0.”
3. Ibid.
For more information on any Calvert fund, please contact Calvert at 800.368.2748 for a free summary prospectus and/or prospectus. An institutional investor should call Calvert at 800.327.2109. An investor should consider the investment objectives, risks, charges, and expenses of an investment carefully before investing. The summary prospectus and prospectus contain this and other information. Read them carefully before you invest or send money.
Calvert funds are available at NAV for RIAs and Wrap Programs. Not all funds available at all firms.
Calvert mutual funds are underwritten and distributed by Calvert Investment Distributors, Inc., member FINRA and subsidiary of Calvert Investments, Inc. #9978 (7/12)
Water. A timely and attractive investment
As the world’s population surges, its collective thirst for water—for drinking, agriculture, industry, and maintaining high standards of living—will continue to surge as well. Yet the world faces a dwindling supply of freshwater in many regions where it’s most needed. With growing urbanization and industrial demand in emerging market countries, water contamination from industrial waste and pollution are also growing concerns.
The precarious imbalance in the supply and demand for freshwater creates a significant need for global investment in sustainable methods of collecting, treating, and delivering water efficiently. It also presents a significant potential growth opportunity for investors. We see this opportunity borne out by the performance of the S-Network Global Water Index, a proxy for global water investments, since its inception in 2003. On a cumulative basis, returns for global water investments have outperformed both the broad U.S. market (as measured by the Standard & Poor’s 500 Index) and global markets (as measured by the MSCI World Index), as shown below.
Investing throughout the entire water network
Challenges—and the opportunities they present—exist throughout the entire water network. The goal of the Calvert Global Water Fund is to be well-positioned to capture those opportunities. The Calvert Global Water Fund invests across the full cycle of water management?from the ground to consumers, to agriculture and industry—and back to the ground again. Companies involved in the management of this scarce and valuable resource present significant investment opportunity. Key areas the Fund’s management focuses on include water and wastewater utilities, companies that design/manufacture water pumps and valves, consulting and engineering firms that build water infrastructure, and companies developing technologies to maximize water supplies through purification, desalination, and metering.
A Word About the Investment Risks. Calvert Global Water Fund is subject to the risk that stocks that comprise the water-related sector may fall in value. The water industry can be significantly affected by economic trends or other conditions, such as the availability of water, the level of rainfall and occurrence of other climatic events, and changes in consumption, in addition to environmental considerations, taxation, and government regulation (including the cost of compliance). The Fund is non-diversified and may invest more of its assets in a smaller number of issuers than a diversified fund; therefore, gains or losses on a single stock may have greater impact on the Fund. A downturn in the water-related sector would impact the Fund more than a fund that does not concentrate in this industry, and the Fund therefore may be more volatile than a typical mutual fund. Lastly, foreign investments involve greater risks than U.S. investments, including political and economic risks and the risk of currency fluctuations.
For more information on any Calvert fund, please contact Calvert at 800.368.2748 for a free summary prospectus and/or prospectus. An institutional investor should call Calvert at 800.327.2109. An investor should consider the investment objectives, risks, charges, and expenses of an investment carefully before investing. The summary prospectus and prospectus contain this and other information. Read them carefully before you invest or send money.
Calvert funds are available at NAV for RIAs and Wrap Programs. Not all funds available at all firms.
Calvert mutual funds are underwritten and distributed by Calvert Investment Distributors, Inc., member FINRA and subsidiary of Calvert Investments, Inc. #9978 (7/12)
Broad exposure to water-related companies with strong potential
The Calvert Global Water Fund invests in a global portfolio of water-related companies. Professional management by experienced and knowledgeable investment professionals delivers an actively managed portfolio of carefully researched investments. The Calvert Global Water Fund is part of the Calvert Solution® Strategies, which include funds that are designed to address some of the world’s most pressing sustainability challenges. The Calvert Global Alternative Energy Fund is part of this series.
Goal: |
Long-term growth of capital by investing at least 80% of its net assets in equity securities of companies significantly involved in the water sector or water-related services or technologies |
|
Fund Symbols: |
CFWAX (Class A), CFWCX (Class C), CFWYX (Class Y) |
|
Benchmark: |
S-Network Global Water Index Total Return |
|
Portfolio Management Team: |
Kleinwort Benson Investors International Ltd. |
Learn more about the Calvert Global Water Fund »
An actively managed fund
Calvert Investments and its sub-advisor Kleinwort Benson Investors International (KBII) bring a unique combination of strengths to water sector investing. Based in Ireland, KBII has been at the forefront of investing in water-related companies since 2000 and its dedicated Eco-Funds management team is backed by regional equity experts in seven global cities. The KBII portfolio team scours the water sector to identify the companies that they believe are market leaders with strong fundamentals, solid long-term prospects, proven technologies, and established market positions. These companies must also meet Calvert’s exacting sustainability and human rights criteria related to water.
About Calvert Investments
Calvert has one of the largest sustainability research departments in the United States dedicated to integrating environmental, social, and governance (ESG) analysis into the investment decision-making process. Our team of more than 15 sustainability research analysts brings a wealth of experience to the complex and sensitive ESG and human rights issues related to investing in natural resources. The Calvert Global Water Fund is, in fact, the only U.S. water fund that has an explicit commitment to advocacy for water as a human right.
Learn more about Calvert Investments »
Invests throughout the entire water network
The Calvert Global Water Fund is not just an investment in drinking water or infrastructure, but in the entire water cycle—collection, treatment, delivery, and sanitation. This means that the Fund invests in a broader universe of potential investments than many other water sector or similar thematic funds.
A pure water fund
Unlike other water funds, under normal market conditions at least 80% of the Calvert Global Water Fund's assets are derived from companies in the water sector. Calvert and KBII define a company in the water sector as one in which at least 50% of its business is related to water or that is included in one of several common water indices.
Water is a Human Right
At Calvert, we believe that everyone has a right to clean water. When you invest in the Calvert Global Water Fund, you invest in that right. Calvert strives to invest only in companies that support this objective.
To advance collaborative solutions to water issues, Calvert has developed close working relationships with environmental, development, and human rights organizations with notable expertise and presence on water challenges, including the Pacific Institute, the CEO Water Mandate, Ceres, UNEP FI’s Water and Finance Workstream, and the Institute for Business and Human Rights.
A Word About the Investment Risks. Calvert Global Water Fund is subject to the risk that stocks that comprise the water-related sector may fall in value. The water industry can be significantly affected by economic trends or other conditions, such as the availability of water, the level of rainfall and occurrence of other climatic events, and changes in consumption, in addition to environmental considerations, taxation, and government regulation (including the cost of compliance). The Fund is non-diversified and may invest more of its assets in a smaller number of issuers than a diversified fund; therefore, gains or losses on a single stock may have greater impact on the Fund. A downturn in the water-related sector would impact the Fund more than a fund that does not concentrate in this industry, and the Fund therefore may be more volatile than a typical mutual fund. Lastly, foreign investments involve greater risks than U.S. investments, including political and economic risks and the risk of currency fluctuations.
For more information on any Calvert fund, please contact Calvert at 800.368.2748 for a free summary prospectus and/or prospectus. An institutional investor should call Calvert at 800.327.2109. An investor should consider the investment objectives, risks, charges, and expenses of an investment carefully before investing. The summary prospectus and prospectus contain this and other information. Read them carefully before you invest or send money.
Calvert funds are available at NAV for RIAs and Wrap Programs. Not all funds available at all firms.
Calvert mutual funds are underwritten and distributed by Calvert Investment Distributors, Inc., member FINRA and subsidiary of Calvert Investments, Inc. #9978 (7/12)
Investments across the water cycle
With the Calvert Global Water Fund, investors gain access to a broad array of companies around the world whose primary focus is on water. The Fund’s holdings span every sub-sector of the water cycle, including the collection, treatment, and distribution of water.
Here are just a few examples of the global companies that the Calvert Global Water Fund holds (as of June 30, 2012):
Pentair
Minnesota-based Pentair is a diversified manufacturer of water products for commercial, municipal, and residential markets globally. The company’s water unit comprises 67% of its sales and has grown dramatically through a dozen acquisitions since the mid-1990s. Part of Pentair’s business strategy involves water reuse and efficiency, as well as reducing costs for more eco-friendly and energy efficient filtration technologies—all of which are in high demand. The company has been focusing on expanding operations in high-growth regions such as the Middle East, China, India, and Latin America. Sales in these fast-growth markets grew from 8% to 19% of the company’s total sales over the past six years.
Pure Technologies
Canada-based Pure Technologies is a world leader in the development and application of innovative technologies for inspecting, monitoring, and managing physical water infrastructure. The company helps commercial customers manage critical infrastructure assets—including water and wastewater pipelines—efficiently and cost-effectively throughout their lifecycle. For example, the firm’s technology enables operators to pinpoint where repairs are needed and to complete those repairs without taking a pipeline or other equipment out of service. Well-positioned to deliver infrastructure solutions to an enormous market, the firm has had rapid growth in North America, and is positioning for long-term growth in Asia, with new leak detection and pipeline inspection projects in the queue.
China Everbright
Hong Kong-listed China Everbright International is involved in the construction, upgrade, and operation of wastewater treatment plants as well as other reusable water and surface water projects. In all, it handles wastewater for more than six million people and the amount of water treated by the company’s facilities increased 18% last year. Potential for further growth is supported by China’s 12th five-year plan, which will boost investment in wastewater treatment and water recycling by 35%. Demand for China Everbright’s services is also being spurred by China’s increasing tariffs on water use, which is driving companies doing business in China to reduce their water costs and increase water use efficiency.
Kurita
Japan-based multinational Kurita Water Industries specializes in water-treatment chemicals and equipment, the operation and maintenance of water treatment facilities, and soil and groundwater remediation services. Kurita’s new technologies have not only substantially reduced costs associated with groundwater pumping, but have also resulted in 70% less sludge generation in wastewater treatment, and the purification of previously contaminated ground water. The company has a new technology for treating wastewater from electric power plants that removes more selenium than conventional technologies. Kurita also has created the Eco Shuttle, a system that recycles the empty containers used to hold water treatment chemicals, thereby reducing waste and conserving resources.
Flowserve
Texas-based Flowserve operates in more than 50 countries, providing products and services that enable companies in water, power generation, and other industries to move fluids more efficiently and reliably. Flowserve manufactures pumps, seals, and valves, and provides engineering and training services, all of which help to avoid leaks and improve transit. The company also manufactures energy-recovery equipment used for reverse-osmosis water desalination. It is well-positioned to respond to a growing need for municipal storm water control—a market projected to increase due to climate change. Recently, Flowserve upgraded and installed new pumps for the city of Dallas, Texas, introducing an innovative pump for storm water control widely used in the Netherlands but new to the United States.
These companies represented the following percentages of Calvert Global Water Fund as of June 30, 2012: Pentair (3.49% of Fund assets), Pure Technologies (1.43%), China Everbright (1.82%), Kurita (6.25%), and Flowserve (5.43%). Calvert may or may not still invest in, and is not recommending any action on, companies listed. For the most recently available information on individual holdings in each Calvert fund, visit calvert.com. Current and future portfolio holdings are subject to market risk.
For more information on any Calvert fund, please contact Calvert at 800.368.2748 for a free summary prospectus and/or prospectus. An institutional investor should call Calvert at 800.327.2109. An investor should consider the investment objectives, risks, charges, and expenses of an investment carefully before investing. The summary prospectus and prospectus contain this and other information. Read them carefully before you invest or send money.
Calvert funds are available at NAV for RIAs and Wrap Programs. Not all funds available at all firms.
Calvert mutual funds are underwritten and distributed by Calvert Investment Distributors, Inc., member FINRA and subsidiary of Calvert Investments, Inc. #9978 (7/12)