Hatch Weekly: Thirsty? Invest in liquid gold, aka water

When it comes to investing: the wetter, the better

Water is easy to take for granted even though it’s finite: 71% of Earth is covered by it, yet only 2.53% is freshwater. The prospect of shortages in the years ahead could make it a precious commodity and an opportunity for savvy investors (like you!).

Take the plunge? 

Some ETFs already invest in water, mostly in companies that deal with the delivery, testing and cleaning of potable water. Companies who stand to grow as governments around the world are anticipating water shortfalls. It’s sad but true: things like population growth, climate change, and pollution are disrupting the world’s freshwater supplies. The United Nations predicts that by 2030, half the world’s population could face severe water stress. Further, they predict that demand for water will exceed supply by 40 percent in 2030, forcing governments to spend $200 billion per year on upstream water supply - up from historical averages of $40 billion - to keep those taps a-flowin’. Is it wrong to potentially capitalise on the global phenomenon of water scarcity? Or is this opportunity at its best? Water wagers create ethical issues for some investors: water is needed for life, so everyone needs access to it. Recognise that there are social justice issues involved if you’re considering investing in this commodity.

Water ETFs making a splash

Like any commodity, the less you have of it, the more valuable it is. Water might be a commodity, but it can’t be bought directly like many others, such as oil. Water investments have greater exposure to regulatory and political risk. For instance, in the developed world, water supplies are often strictly regulated, which can make governments big customers and potential competitors. So, how does a Hatch investor get started then? Don’t go jumping off the deep end. The best move for novice water investors is to follow due diligence, get appropriate advice, and know full well what they're dipping their toes in.

Here are three water ETFs that we researched:

1. Invesco Water Resources ETF (PHO)
The largest and most popular water ETF, with over $865 million in assets under management. PHO tracks the NASDAQ OMX US Water Index, which consists of 35 water shares, most of which are mid- to large-size US. equities.

2. Invesco S&P Global Water ETF (CGW)
This ETF tracks the S&P Global Water Index, which consists of approximately 50 water shares, most of which are mid-cap. The allocation is split evenly between the US and global stocks.

3. Invesco Global Water ETF (PIO):
With over $183 million in assets under management, PIO tracks the Nasdaq OMX Global Water Index and focusses on global companies that create products for water conservation and purification. Regional allocation consists of about 55 percent US water shares and 45 percent global water shares.

What is Hatch?

With Hatch, you can now buy and sell shares in over 2,900 companies & 500 exchange-traded funds, all listed on the US share markets. Invest dollar amounts to buy as much or as little of a company or ETF as you like, even if it’s a fraction of a share. Powered by Kiwi Wealth. See how it works

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The $100 billion dollar road to Uber’s IPO

Take a deep breath, investment yogis. Few retailers are performing as well as Lululemon Athletica (LULU). Halfway through 2019, the yoga apparel specialist has blown up its management's growth outlook for five quarters in a row. Shares are up nearly 150% since mid-2016, which bodes well for patient investors.

Yoga is more than just a trend – it’s a lifestyle

Lululemon's outperformance suggests its rebound isn’t just about a few trendy product releases. Sales have jumped 22%, year on year despite competition from Nike (NKE) and other rivals targeting yoga apparel. E-commerce has doubled in the last two years and accounts for over one-quarter of sales. But what does it all mean? Management's goal of $4 billion of annual sales by fiscal 2020 is a strong possibility. Revenue is expected to reach $3.7 billion this year. If you're considering getting into the yoga game: the stock is going for almost 50 times the past year's earnings!

Don’t get too comfortable (in those yoga pants)

The company's struggles in the early part of the decade show that it only takes a few quality-control issues to knock an apparel company right off a high horse (which isn’t a yoga pose, BTW). Those see-through yoga pants happened and resulted in a 17% stock price plunge in 2013. What’s exciting right now is that Lulu is branching out from fitness into food – look who’s diversifying! Their new flagship store in Chicago features its restaurant, Fuel, as well as two fitness studios and a huge shopping area. Fuel is being done in collaboration with Blue Plate, a well-known caterer and event company in Chicago, and offers the expected healthy fare that yogis would want to eat like smoothies and bowls, but sneaks in a cheeky burger for post-workout noms. A bespoke restaurant won't accomplish much unless it leads to more extended and frequent visits (leading to more sales), but things are looking up(ward dog) for Lulu.

Computer sez invest in AI

Data analytics, driverless cars, digital assistants, dating apps, and cancer research. What do they all have in common? They all use AI (artificial intelligence). This technology is only going to get more and more integrated into all industries, so how can investors (that’s you) benefit from its growth?

Trillion-dollar billz

Not sure how this tech can benefit businesses all that much? Take a look at the amazing Amazon (AMZN) – if you’re an Amazon investor, then you’re already an AI investor, friend. The tech giant has been using AI to determine product placement on its e-commerce sites, figure out which deals to offer what customers, and has integrated it into its Amazon Web Services cloud computing platform. But it’s not just big tech who’s profiting from AI. The car industry is being completely transformed by it. Tesla (TSLA) knows what’s up, so does Ford (F). Even Alphabet’s (GOOG) onto it with its self-driving car subsidiary, Waymo, which has logged more than 11 million autonomous miles on real roads. Artificial intelligence helps companies in all industries make their businesses more efficient and leads to bigger and better profits. According to PwC, AI will add $15.7 trillion to the global economy by 2030.

Siri, what’s the big deal with AI?

AI assistants are becoming more prevalent and useful too. Apple’s (APPL) Siri, Google’s Google Assistant, and Amazon’s Alexa are becoming an essential way for us to control the devices we use, and live our lives more efficiently. It’s not just the FAANGs that are embracing this new tech. If you go digging in Hatch, you’ll find a heap of up and coming companies who are getting into AI. Here are a few we’ve found for you to take a peek at:

  • Global X Robotics & Artificial Intelligence ETF (BOTZ)

  • Nvidia Corporation (NVDA)

  • CrowdStrike (CRWD)

  • Twilio (TWLO)

  • Salesforce (CRM)

  • Fortinet (FTNT)

  • Match Group Inc (MTCH)

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