Bertrand Lecourt has a strong conviction: “No economy without water and no sustainable economy without waste management.” This strategy is in line with the United Nations Water Conference, held in New York from 22 to 24 March, which aims to accelerate progress towards universal access to drinking water and sanitation by 2030.

For Lecourt, water and waste are “unavoidable elements of civilisation,” “invariants” that make it possible to ignore the exercise of macroeconomic forecasting, “an exercise in which we are often wrong. If not always.” Water and waste are therefore invariants whose growth is driven by five engines: urbanisation--“since 2011, there are more people in cities than in the countryside. And when you move from the countryside to the city, you become richer and you consume 4 to 5 times more”;  the resulting increase in consumption--“our water footprint reaches 15,000 litres per day”; the need for constant investment in infrastructure; the introduction of regulations that increasingly favour sustainable investment; and the vital need for humans to reprocess this resource. Five drivers where the growth of needs exceeds the growth of GDP.

Linked sectors

Linking water and waste might seem like an exercise in splitting hairs. Not so, says Lecourt: “Everything we consume comes from water. And everything we consume becomes waste within two years. Water and waste are linked. If you protect and recycle water, you protect and recycle waste. Water and waste are transported and cleaned. That’s the other side of consumption. The issues are the same--transport and treatment--as is the value chain.”

It is in this value chain that the fund invests, from pump and valve manufacturers to water treatment companies, water utilities and wastewater recycling companies, “an investment universe of $2.5trn.”

An instrument for financial and sustainable diversification

It’s a positioning “that offers a double diversification, financial and sustainable.”

Sustainable because the investments made in these sectors are aimed at preserving water resources and enabling better recycling of waste. “This is a point on which we are very much behind. At present, only 50% of waste is collected on a global scale. This figure drops to 30% in India.”

From a financial point of view, the companies Lecourt targets are financially healthy and highly profitable. “Over the last twenty years, the investment universe has changed enormously. We have gone from 30 stocks to more than 350 and the market capitalisation has increased fivefold. Growth is continuous and stable with an average annual return of between 13% and 15%. And this is not linked to volume, but to the increase in margins. A “defensive” growth that offers investors a “double diversification”: “if you look at the performance of all the financial assets over fifteen years, you have the same return in terms of risk by holding completely different things. There is total decorrelation. 95% of the portfolio is ‘pure,’ including exposure to the water and waste sectors.”

The strategy is also particularly defensive against inflation--“cost increases are passed on directly to consumers”--and has very low volatility, insists Lecourt.

A LuxFlag labelled fund

The fund was launched in 2021. But Lecourt has been developing this strategy for more than 10 years, at Aquilys Investment Management, Polar Capital and Fidelity International, where the fund he managed from 2018 to 2021, the Global Sustainable Water & Waste, raised €3bn in eighteen months.

It is distributed by J O Hambro Capital Management (JOHCM) and managed “independently” by Regnan, the group’s Impact Investing brand. “By design, the fund offers a particularly high level of ESG standards. It is also a category 9 fund in the SFDR sense, and has obtained various quality labels, including Luxflag in Luxembourg, which was obtained in December 2021, and Febelfin in Belgium,” explains Frédéric Lejeune, head of France--Belgium--Luxembourg--Geneva and Monaco at JOHCM, who is in charge of developing these markets.

This story was first published in French on . It has been translated and edited for Delano.