"Purchase the water companies that sustain the world economy"

Regnan Sustainable Water and Waste strategy fund manager Saurabh Sharma identifies three water companies that he would invest in

Despite being essential to any economy's efficient operation, water and waste management are frequently disregarded in investment portfolios. Businesses that deal with pumps and valves, water filtration and purification, water-related networks and infrastructure, metering and billing, and wastewater treatment are all part of the water value chain.

Companies that offer waste solutions include those that deal with hazardous waste management, pollution prevention and control, environment planning, waste collection, transportation, sorting, and recycling, as well as associated engineering and consulting works.

Bringing together the best opportunities from the waste and water value chains is the Regnan Sustainable Water and Waste Fund. Every stock in this understudied segment of the market is carefully examined for sustainability credentials and fundamentals.

Due to their distinctive qualities and very little overlap with global equity portfolios, the stocks in our theme offer much-needed diversification away from popular industries like energy and technology. For investors looking for resilience and long-term growth, these sectors offer particularly alluring opportunities in a climate of high inflation, tariff uncertainty, and macroeconomic volatility.

Repeated income increases resilience.

One of the top US providers of recycling and non-hazardous solid waste management services is Republic Services (NYSE: RSG). Stable revenue streams are provided by the company's recurring business model, which increases its resistance to downturns in the economy. RSG provides consistent pricing, which propels organic growth in the mid-single digits and complements acquisition contributions.

Its leadership in sustainability and technology is further strengthened by investments in landfill gas-to-energy projects and advanced recycling. Strong free cash flow, careful capital allocation, and a sensible dividend policy allow RSG to strike a balance between reinvesting in innovation and operational efficiency and maximizing shareholder returns. The stock is rising in value.

A global provider of plumbing, heating, and water-quality products and services, Watts Water Technologies (NYSE: WTS) has an estimated market value of £20 billion and serves a wide range of customers. The business is ideally positioned to benefit from secular trends in sustainability, energy efficiency, and water conservationall of which are important concerns for residential, business, and industrial clients globally. Historically, the company has produced steady free cash flows and has a division that handles part replacements and repairs.

Watts' line of "smart and connected products"devices that can be linked via the Internet of Thingsis growing quickly. Because of their capacity to lower resource consumption and boost operational efficiency, these products now account for 25% of sales and command premium prices. Additionally, we anticipate that the company will have significant pricing power, which will lessen the immediate effects of tariffs.

Pursuing expansion in Japan.

A well-known Japanese waste management and recycling company, Daiei Kankyo (Tokyo: 9336), is a lesser-known waste management firm that we like. It competes in the fiercely competitive Japanese waste management market, where the top four firms hold less than 4% of the market. The company plans to acquire at least £10 billion over the course of three years.

We are encouraged by Daiei Kankyo's medium-term strategy, which was recently released. It calls for maintaining a 35 percent Ebitda margin in the near future while continuing to invest in growth areas, such as public-private partnerships. With a consolidated dividend payout ratio greater than 33%, shareholder returns continue to be a top priority.