Pa. Firm Launches Water-Focused Hedge Fund

Feb 22 2008 | 2:00am ET

West Conshohocken, Pa.-based Aqua Terra Asset Management is banking on the world’s increasing demand for water.  Aqua Terra Water Partners is slated to launch on March 1 with between $5 million and $10 million.

The long/short hedge fund, investing in global water and water infrastructure assets, aims to be highly selective and opportunistic on the short side, because “this is really a story of water companies that have good long-term growth prospects and you can really get hammered on the shorts so you have to be selective and careful,” said a source with knowledge of the fund.

All told, the portfolio will hold some five short positions and another 25 to 30 long names.

The source said the lack of water in the emerging markets of India and China coupled with “huge water issues” here in the U.S. makes it an opportune time for fund launch.

The fund is targeting 12% to 15% annual returns with a volatility target that’s slightly less than the Standard & Poor’s 500 Index. It charges a 1.5% management fee and a 20% performance fee, subject to a high water mark, and its minimum investment requirement is $250,000.

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