Last December, the STOXX® Future Water ESG index became the underlying for a new ETF from Deka Investment that helps investors gain exposure to companies leading innovation in the water sector worldwide.
The index is part of a growing STOXX Thematics suite. It selects businesses involved in the sourcing and treatment of water, as well as those developing equipment, infrastructure and new technologies essential to water management. Its focus is an investment theme impacted by significant global economic, societal and resource-related developments.
To discuss the strategy of the index and the Deka STOXX Future Water ESG UCITS ETF, we caught up with Thomas Pohlmann, Head of ETF Product Management at Deka Investment. Below is our exchange.
Thomas, why is water an important theme globally, and why is it gaining the attention of investors?
“Water is one of the world’s most critical resources, yet access to it remains a major challenge. Today, around 2.2 billion people lack access to safe drinking water, while 3.5 billion people live without adequate sanitation.[1] These issues have far-reaching implications for public health, economic development and overall quality of life.
At the same time, pressure on global water resources continues to increase. By 2030, the gap between freshwater demand and supply is expected to reach around 40%, according to recent forecasts.[2] This highlights the growing risk of water scarcity across many regions.
The economic consequences could also be significant, as water shortfalls strongly hinder development.
A more recent pressure point is the rapid expansion of data centers, which require significant water for cooling. This is raising new concerns about local water availability in developed markets that have historically faced fewer constraints
For investors, this presents a compelling long-term investment theme. Given the growing need for sustainable and efficient water supplies, there is rising global demand for water infrastructure, treatment technologies, efficiency solutions and responsible resource management. Companies providing such products and services stand to benefit from this.”
What sort of companies does the Deka STOXX Future Water ESG UCITS ETF invest in?
“The ETF invests in companies supporting optimized and more efficient use of water resources through innovation, infrastructure and essential services. The focus is on four areas of the water value chain: water equipment, water infrastructure, water treatment and water utilities.
A key feature of the strategy is its emphasis on innovation. Much of the future growth in the water sector is expected to come from technologies that help improve efficiency gains, leak reduction and water reuse. These include digital solutions such as artificial intelligence, the Internet of Things and predictive analytics.”
How does the underlying STOXX Future Water ESG Index select its constituents?
“The selection process begins with the STOXX Developed World All Cap Index as universe and first applies size and liquidity filters. Companies must pass ESG screens as provided by ISS Sustainability, covering norms-based compliance, human rights and environmental controversies, as well as product involvement activities.
From there, the index uses a dual-selection approach based on revenues and innovation. The first step selects companies that generate at least 25% of their revenues from specific water-related business sectors.[3] The second selection approach focuses on intellectual property. Companies can qualify if they rank within the top 10% based on the number of high-quality patents related to water technologies, or if at least 30% of their patent activity is concentrated in these areas.”
How do you identify those companies with key innovation patents?
“STOXX works with Swiss analytics provider EconSight, which maintains a specialist patents database, to identify companies active in six water-related patent categories, including atmospheric water generation, drinking water purification, irrigation systems and desalination. This patents approach differentiates the index from traditional thematic strategies, and, together with the revenues screen, helps the ETF capture not only current leaders but also emerging innovators shaping the future of water technologies.”
What are some key examples of index constituents?
“The index’s largest constituent is currently American Water Works, a leader in water treatment and distribution in the US. The second-largest component is Ecolab, which focuses on water efficiency and industrial monitoring solutions.”
Who is the Deka STOXX Future Water ESG UCITS ETF for?
“The strategy is accessible to both institutional and retail investors who wish to invest in a theme with significant long-term growth potential and that contributes to an optimized use of resources.
As a focused thematic ETF, it is particularly well-suited as a targeted, return-oriented satellite allocation within a broadly diversified portfolio. At the same time, the ETF is not only aimed at investors with an explicitly sustainability-driven approach, but also at those seeking to capture forward-looking thematic opportunities while benefiting from an exchange-traded investment vehicle.”
Further reading Global water innovators: a sustainability perspective |
[1] United Nations, “The Sustainable Development Goals Report 2025,” July 2025. Data corresponds to 2024.
[2] Global Commission on the Economics of Water, “The Economics of Water.”
[3] RBICS Level 6 sectors.