Liquid Assets

“This story isn’t new,” says Hans Peter Portmann. In fact, it is as old as water itself.

Portmann, an affable Swiss with an encyclopedic knowledge of arcane industry statistics, is manager of the recently launched Pictet Global Water Fund. Manager of the $400 million PGSF Water Fund, based in Luxembourg and traded offshore, he is now trying to convince American investors that water is a business that is ripe for utility-industry mergers, privatizations, and growth led by technology-powered productivity gains. “Water is perceived of as a little bit defensive,” says Portmann. “But there is above-average growth hidden in this sector.”

The sector, by Portmann’s reckoning, includes water utilities, bottled water providers, waste management companies, and manufacturers of water purification and desalting systems and monitoring equipment. But while the industry’s defensive image certainly helped Portmann’s Luxembourg fund achieve a gain of about 20% in the year following its debut during the tech-stock rout in late 1999, more recent months have been less kind. As many investors fled equities of any kind, the fund turned in a 9.9% decline for 2001 . The U.S. fund, with only $1 million in assets, is too new to have a Nasdaq ticker symbol or a record.

But Portmann is undeterred. He insists the water industry’s fundamentals argue for a long-term recovery, and notes that while per capita water consumption in the U.S. has been static for the past 15 years, use in such areas as manufacturing and farming is surging. “One microchip needs 10,000 gallons of pure water,” he says. “Growing one orange requires 13 gallons–and 70% of world water use is for agriculture.”