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The utility of water has never been clearer
EPFR’s data can be filtered in dozens of ways, including sifting through lists of individual funds to create bespoke groups. A recent example is the selection of utility sector funds with water mandates into a custom group.
As it happens, these funds are in focus and in demand. With water getting scarcer in many parts of the world, governments boosting budgets for “green” infrastructure and water’s key role in next generation industries – by some estimates the average semiconductor plant requires over 3 million gallons of clean water a day – investors see both need and opportunity.
The upshot? Water Funds had, through August, posted inflows 31 of the 34 weeks year-to-date and have outperformed the broader Utilities Sector Fund group.
From a quantitative perspective, this trend poses a number of questions. How does it tie in with the environmental, social and governance (ESG) theme that has been a major investment factor in recent year? What are the key correlations?
Looking at historical data, the flows seen in the past three years are exceptional. Since 1Q19 there have been only two months where net flows were negative. In April of this year, Water Funds recorded the highest monthly inflow -- $859 million -- since 2006.
In relative terms, these funds are doing better than the overall group when it comes to attracting new money.
A good performance, but dancing to what tune?
Water Funds are not just pulling in fresh money. They are delivering returns. Again, when compared against all Utilities Sector Funds, Water Funds have been the better bet YTD.
What is not so clear, and requires further quantitative analysis, are the factors contributing to this outperformance. One obvious candidate, already mentioned, is the broad shift to ESG assets. The performance gap between SI/ESG Utilities Sector Funds and non-SRI/ESG Utilities Sector Funds YTD is roughly the same as the Water versus all Utility Sector Fund groups.
Given water’s central role in agriculture, many forms of manufacturing, both public and private hygiene and health and climate cycles, the correlation between Water Funds and investment factors is unlikely to stop at SRI/ESG.
Following flows to their source
As part of the basic research and organization needed to do more sophisticated quantitative research, EPFR has developed some stock level dashboards to track factors such as flow momentum and ownership concentration.
In future blogs, we will discuss how we have used this foundational work to explore correlations and signals stemming from human interaction with the most fundamental of commodities, water.
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EPFR - fund flow & allocations data
By Vik Srimurthy 20 Oct 2021
In late October the mind – at least in the US – turns to brews, potions and mixtures as Halloween looms and faux witches cauldrons dot suburban lawns. Read more...
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EPFR - fund flow & allocations data
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EPFR - fund flow & allocations data
By Cameron Brandt 08 Oct 2021
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EPFR - fund flow & allocations data
By Cameron Brandt 01 Oct 2021
The third quarter of 2021 ended with investors continuing to whistle in the dark, committing fresh money to EPFR-tracked Equity and Bond Funds despite multiple risks to global growth. These include political brinkmanship over the US debt ceiling, the energy squeeze hitting China and parts of Europe, the winding down of programs implemented to buffer the initial shock of Covid-19, the pandemic’s evolution and the sustained rise in both producer and consumer prices. The final week of September saw Equity Funds pull in another $9.1 billion, capping their fourth consecutive quarterly inflow, while Bond Funds attracted another $7.9 billion that lifted their year-to-date total north of the $670 billion mark. Both groups have now exceeded the totals for their full-year records, set in 2013 and 2019 respectively.
Topic Industry News
EPFR - fund flow & allocations data
By Vik Srimurthy 17 Sep 2021
EPFR’s data can be filtered in dozens of ways, including sifting through lists of individual funds to create bespoke groups. A recent example is the selection of utility sector funds with water mandates into a custom group. As it happens, these funds are in focus and in demand. With water getting scarcer in many parts of the world, governments boosting budgets for “green” infrastructure and water’s key role in next generation industries – by some estimates the average semiconductor plant requires over 3 million gallons of clean water a day – investors see both need and opportunity. Read more...
Topic Industry News
EPFR - fund flow & allocations data
By Cameron Brandt 17 Sep 2021
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Topic Industry News
EPFR - fund flow & allocations data
By Cameron Brandt 10 Sep 2021
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Topic Industry News
EPFR - fund flow & allocations data
By Cameron Brandt 03 Sep 2021
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Topic Industry News
EPFR - fund flow & allocations data
By Cameron Brandt 27 Aug 2021
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Topic Industry News
EPFR - fund flow & allocations data
By Steven Xinlei Shen 24 Aug 2021
The cancellation of Ant Financials’ scheduled IPO last November signaled the start of a sustained push by Chinese regulators to clip the wings of major technology plays. That push expanded to other businesses seen as out of line with official goals and policies. In their latest move, those regulators are proposing new rules requiring any Chinese company seeking to list on a foreign stock exchanges to carry out a cybersecurity review, Not surprisingly, given these official actions, foreign investors are running shy of Chinese equity. Flows for China Equity Funds were negative eight of the past 11 weeks going into mid-August and fund allocations to foreign listed China share classes – ADR, N Share and S chip – continues to fall. Read more...
Topic Industry News
EPFR - fund flow & allocations data
By Cameron Brandt 20 Aug 2021
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Topic Industry News
EPFR - fund flow & allocations data
By Cameron Brandt 13 Aug 2021
Early August saw Covid-19 cases rising in many corners of the world, US producer prices climbing at their highest rate since the metric was introduced in 2010, French protestors taking to the streets to fight vaccine mandates, US lawmakers arguing about debt ceilings and another $3.5 trillion spending package, the UN making apocryphal predictions about climate change and the clock continue to tick down on the Angela Merkel era in Germany. Faced with the daunting task of piecing together the shape of the ‘new normal’ from these and other trends and data points, investors focused on something they do understand – corporate earnings. With companies on both sides of the Atlantic pumping out eye-catching reports for the second quarter, EPFR-tracked Global Equity Funds extended an inflow streak stretching back to the final week of 2Q20, US Equity Funds absorbed fresh money for the 25th time in the 32 weeks year-to-date and flows into Europe Equity Funds hit an eight-week high. Despite high flying equity indexes, European investors are still gravitating to cash. Europe Money Market Funds, which have posted inflows for seven straight weeks, are the leading group in flow terms quarter-to-date. During the second quarter they recorded the biggest outflow and major EPFR-tracked fund groups.
Topic Industry News
EPFR - fund flow & allocations data
By Cameron Brandt 06 Aug 2021
What to make of a market where the response to fears of slowing global growth is a string of record highs in equity markets on both sides of the Atlantic? How best to position yourself when inflation in the US is, by some measures, at a 30-year high but the stock of global debt with negative interest rates recently hit a seven-month high? Where is the sweet spot when ‘green’ funds extend lengthy inflow streaks and the price of thermal coal hits levels last seen over a decade ago? Faced with the need to reconcile these and other contradictory market signals, many investors opted to take a step back during the week ending August 4. Over half the $44 billion absorbed by all EPFR-tracked fund groups went to Money Market Funds. The headline number for Equity Funds, which have recorded inflows every week so far this year, was the fourth smallest year-to-date and Dividend Equity Funds saw their longest run of inflows since 1Q15 come to an end.
Topic Industry News
EPFR - fund flow & allocations data
By Cameron Brandt 06 Aug 2021
Going into the final days of July, the Equity and Bond Funds with socially responsible (SRI) or environmental, social and governance (ESG) mandates tracked by EPFR chalked up their 51st and 70th consecutive inflows respectively. ESG investing clearly has long-term momentum and is becoming increasingly mainstream...
Topic ESG
EPFR - fund flow & allocations data
By Vik Srimurthy 04 Aug 2021
In early June hundreds of Venetians gathered to protest the return of giant cruise ships to their famous city on Italy’s Adriatic coast. Waving flags and signs bearing the words “No Big Ships,” they reiterated their opposition to the passage of vessels often weighing over 100,000 tons through canals originally engineered for sailing ships and galleys. Read more...
Topic Industry News
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