Stewardship International taps into water and education

Individual stock selection is becoming increasingly important as the dispersion of returns within sectors widens.

F&C's Sophie Horsfall, manager of the F&C Stewardship International Fund, is on the lookout for companies able to restructure and position themselves to benefit from economic recovery with leaner cost structures.

Within the F&C Stewardship International Fund, water infrastructure is a long-term structural theme and Horsfall is seeing attractive opportunities arise across economic cycles.

Horsfall commented: "As economies continue to develop, so does the demand for water in terms of what is needed to support economic activity; and as individual living standards improve, so does each individual's consumption of water. Consequently, there will be a strong demand for water services including leak detection, desalination and water purity testing."

She recently established a position in Kurita Water, the leading Japanese domestic maker of water treatment chemicals and facilities. Horsfall explained: "I believe Kurita Water continues to have a strong competitive position due to its technological knowhow, development of prefabricated water treatment products and strong sales network. I anticipate new ultra-pure water supply projects for semiconductors and hence expect positive newsflow along with investments in new growth opportunities."

Horsfall has also recently added Anhanguera Educacional, a provider of educational services, to the fund.

She concluded: "As emerging market economies continue to develop, there is a growing, more affluent class emerging with increased spending power accompanied by demand for better healthcare and education services for their children. Anhanguera Educacional has delivered high growth mainly driven by various acquisitions since its IPO and has shown a notable improvement in margins. I expect to see continued expansion and, given the management's strong track record, I'm confident that a variety of products will be launched in the next five years."