In fact, that’s the question we asked Neil Berlant of the PFW Water Fund.  To make money, and because no one else does, seem pretty reasonable starting points.

TWST: Why invest purely in water?

Mr. Berlant: As I indicated previously, I have been focused on the water industry as an investment area since 1986. During that period of time, my portfolios have beaten the market consistently every year and there was only one down year overall. It is kind of amusing in that while everybody claims to be familiar with water, and indeed they are, water has been woefully under-represented in most institutional investment portfolios.

The last couple of years have seen increased investment activity in the water sector, but nonetheless most portfolios have little to no participation. Water is at the heart of everything in our life, every product that is manufactured, every crop that is grown. So water, when viewed from that perspective, becomes a far more crucial entity from an economic point of view.

In addition, the infrastructure of this country, as well as other countries, is in great disrepair. There are estimates in the United States today by the EPA that we are looking at $1 trillion of deferred capital spending to upgrade our nation’s water infrastructure – that is, the pipes and distribution systems throughout the United States – over the next 20 years. Secondarily, but even more persuasively, the driving force and change in awareness is coming about as a consequence of an increasing price of water, which I estimate will be up as much as two to three times on an average basis across the nation in the next three years. The increasing price of water is catapulting the awareness level of water problems and changing the way people think about water.

More here.

Some thoughts on Real Estate investing in the current environment from David Siopack of the  Schwab Global Real Estate Fund.   Definite bias towards offices.

TWST: What advice would you give to investors who are interested in diversifying into global real estate?

Mr. Siopack: Investing in real estate to an extent is a longer-term investment; it is not something that you play in and out of on a weekly, daily or monthly basis. It is something that you build up over time, because real estate holds up very well over time. Any time is a good time to get started in investing in securitized real estate. A global fund is probably one of the best avenues to do that because it does open up the entire globe for you to invest in. Investing in a global fund allows you to have higher exposure to those markets that should perform well, which ultimately means that you have a lower exposure to arkets that are more mature, mainly the central US markets and select US markets where the economies, the real estate fundamentals and valuations  are equal at best.

Schwab has a recommended allocation to real estate which I believe is 5%, and that number is constantly being reviewed. Others, including Ibbotson  ssociates, are allocating a higher number, closer to 10%. When we compare it  o large institutions and pension funds, some have substantially higher  llocation to real estate. Granted, that may be through direct real estate investments, but the real estate universe should be in the 5% to 10% range.

TWST: Would you tell us of some holdings that you feel are representative of your general investment approach?

Mr. Siopack: A few examples of companies that we are invested in are those that have exposure to Hong Kong offices. Because of their relationships and their location, they have some development activity in Mainland China.  hose are companies like Sun Hung Kai (SUHJY) and New World Development  NDVLY), just to name a few, that are really true Hong Kong developers. They  re owners of office and to some extent residential and other property types,  ut they have also made some investments in development in mainland China,  pecifically the Shanghai markets. Those are companies that we favor.

On a global basis, our largest holding is a company called Westfield out of Sydney, Australia. Westfield is one of the largest operators and developers of shopping centers, shopping malls. They have exposure to US markets, to Australia, and New Zealand, and in the last couple of years, they have begun developments in London and the UK. Two of the projects that they are  urrently working on are both in London – one is Westfield London and the  other one is Stratford City, which is right next to the site of the 2012  Olympics.

More on this interview here.