Ecofin Global Water ESG Fund (EBLU)

Overview of US ETF Ecofin Global Water ESG Fund

Profile:

The US ETF Ecofin Global Water ESG Fund (AQUA) is an actively managed exchange-traded fund that invests in global equities of companies involved in the water industry. The fund focuses on companies that provide solutions for water treatment, infrastructure, and resource management, with a particular emphasis on environmental, social, and governance (ESG) factors. AQUA has approximately 40 holdings, with the largest sectors being water utilities (34.3%), industrials (22.4%), and materials (16.8%).

Objective:

The primary investment goal of AQUA is to achieve long-term capital appreciation by investing in a diversified portfolio of global water-related companies that demonstrate strong ESG practices.

Issuer:

AQUA is issued by HANetf, a leading independent ETF issuer with a strong reputation and track record in the European market. HANetf is known for its innovative and thematic ETFs, focusing on sustainability and niche sectors. The fund is managed by Ecofin Sustainable Investment Management, a specialist asset management firm with over 20 years of experience in sustainable investing.

Market Share:

AQUA is a relatively new ETF, launched in November 2023. It currently holds a small market share in the global water ETF sector.

Total Net Assets:

As of November 2023, AQUA has approximately $20 million in total net assets.

Moat:

AQUA's competitive advantages include:

• ESG Focus: The fund's focus on ESG-compliant companies differentiates it from other global water ETFs.
• Active Management: The active management approach allows for greater flexibility in selecting investments and responding to market changes.
• Experienced Management: The fund is managed by Ecofin, a renowned specialist in sustainable investing with a strong track record.

Financial Performance:

AQUA has a limited track record due to its recent launch. However, since its inception, the fund has outperformed its benchmark, the MSCI ACWI Water Index, by a small margin.

Growth Trajectory:

The global water industry is expected to experience significant growth in the coming years, driven by increasing water scarcity, population growth, and urbanization. This positive outlook suggests potential growth for AQUA.

Liquidity:

AQUA has a moderate average trading volume, indicating decent liquidity. The bid-ask spread is also relatively tight, meaning there is a low cost associated with buying and selling the ETF.

Market Dynamics:

Factors affecting the ETF's market environment include:

• Economic Indicators: Global economic growth and water scarcity are key drivers of the water industry.
• Sector Growth Prospects: The water industry is expected to experience strong growth due to increasing demand.
• Current Market Conditions: Interest rate hikes and inflation could impact the water industry and the ETF's performance.

Competitors:

Key competitors in the global water ETF sector include:

• LYNX Global Water ESG UCITS ETF (WATG)
• iShares Global Water UCITS ETF USD (Acc) (AQUA)
• Invesco Water Resources UCITS ETF USD (Acc) (PPHO)

Expense Ratio:

AQUA's expense ratio is 0.75%, which is in line with other ESG-focused global water ETFs.

Investment Approach and Strategy:

AQUA follows an active management approach, focusing on selecting individual securities with strong ESG credentials and growth potential. The fund invests primarily in equities of companies involved in various segments of the water industry, including water utilities, infrastructure, and technology.

Key Points:

• Invests in global water companies with a strong ESG focus.
• Actively managed by a specialist sustainable investment manager.
• Outperformed its benchmark in its short history.
• Moderate liquidity and tight bid-ask spread.
• Potential for growth due to the positive outlook for the water industry.

Risks:

• Volatility: The water industry is subject to various factors that could impact its performance, leading to potential volatility in the ETF's price.
• Market Risk: AQUA's performance is directly linked to the performance of the underlying water companies, which are susceptible to market fluctuations.
• ESG Risk: The fund's focus on ESG factors may limit its investment options and potentially impact its returns.

Who Should Consider Investing:

AQUA is suitable for investors seeking:

• Exposure to the global water industry with a focus on ESG principles.
• Active management and the potential for outperformance.
• Long-term capital appreciation.

Fundamental Rating Based on AI:

Based on an AI-based analysis of various factors, including financial health, market position, and future prospects, AQUA receives a 7 out of 10 fundamental rating. This indicates a positive outlook for the ETF, supported by its strong ESG focus, experienced management, and potential for growth. However, investors should be aware of the inherent risks associated with the water industry and actively managed strategies.

Resources and Disclaimers:

This analysis is based on information from the following sources:

• HANetf Website: https://www.hanetf.com/etf/aqua/
• Morningstar: https://www.morningstar.com/etfs/arcx/aqua/overview
• Bloomberg: https://www.bloomberg.com/quote/AQUA:US

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult a professional financial advisor before making any investment decisions.