The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
The Virtus Duff & Phelps Water Fund remains confident in the long-term secular growth of the water sector, driven by global spending to address water scarcity, quality, and aging infrastructure. During the first quarter of 2026, the fund’s net performance declined slightly, returning -1.08% due to detracting allocations in life sciences, engineering and construction, and select international utilities. However, strong stock selection in Brazil’s privatized utility SABESP and the U.K.'s Severn Trent offset some of these losses. Looking forward, the investment environment faces increased near-term macro uncertainty from Middle East geopolitics, rising energy costs, and prolonged high interest rates. In response, the portfolio is shifting focus toward industrial water exposures with structural tailwinds like microelectronics and healthcare, while maintaining a selective and cautious stance on residential and commercial construction markets.
Secular global demand for clean water, universalization of services, and infrastructure upgrades drive multi-year growth opportunities for specialized utilities and technology providers.
The near-term market environment is less straightforward due to potential geopolitical events, energy price volatility, and fluctuating interest rates. While long-term structural demand for water infrastructure remains highly resilient, industrial recovery could be delayed. Selective exposure to secular tailwinds, such as microelectronics and data centers, is favored over general commercial and residential segments.
As of Mar 31, 2026
David D. Grumhaus Jr. serves as President and Chief Investment Officer at Duff & Phelps Investment Management Co. since February 2014, holding an MBA from Harvard Business School and a BA in History from Princeton University. His experience includes Partner and Portfolio Manager at Copia Capital from 2003 to 2012, Vice President at Goldman Sachs between 1999 and 2002, and Associate at William Blair & Company from 1994 to 1999. Nicholas Holmes, CFA, serves as Managing Director, Portfolio Manager, and Senior Research Analyst, joining Duff & Phelps in 2023 with investment career beginning in 2010 and active focus on the water sector since 2015. He holds a BA in Political Science from Yale University, an MBA from the University of Kansas, and previously was a portfolio manager at TortoiseEcofin managing a sustainable global water strategy.
The fund seeks attractive returns by investing in companies that specialize in water technologies to address the global water crisis, noting that less than 1% of the earth's water is potable and global demand is rising. The fund is actively managed and attuned to environmental, social, and governance (ESG) metrics, focusing on market leaders that look to improve water supply, efficiency, and quality. The investment approach targets pure-play companies committed to addressing water scarcity and improving the sustainability of global water resources. The fund is aligned with four of the 17 United Nations Sustainable Development Goals (SDG), with a focus on Goal 6, 'Clean Water and Sanitation,' offering potential exposure to financial, environmental, and social value.
Lead Portfolio Manager
David D. Grumhaus, Jr.
Managing Partner
Moderate Conviction Bullish
Market Conviction
The fund's top ten holdings represent over 55% of the portfolio, and the manager presents deep, fundamentally driven investment cases for major contributors and detractors. However, broader macroeconomic hedges and a relatively diversified footprint moderate the conviction score.
Growth Outlook
The manager is constructive on solid underlying sector fundamentals, but expresses caution and notes that the near-term setup is less straightforward than in previous quarters.
Risk Appetite
The portfolio balances stable, regulated water utilities with more cyclical, high-growth industrial equipment providers, showing an overall balanced risk posture.
Capital Deployment
The manager discusses selective reallocation and maintaining core positions without indicating significant shifts in overall cash levels or aggressive net deployment.
Forward Guidance
The manager states that they will continue to dynamically assess positioning and adjust exposures as risk/reward dynamics evolve, which indicates a watchful, balanced posture.
Language Signal
The letter contains a healthy balance of positive long-term growth commentary alongside clear near-term risk warnings regarding interest rates, geopolitical issues, and industrial recovery delays.
Perceived Risk
The manager notes multiple macro threats including energy price inflation, rate volatility, policy uncertainty, and slow residential recovery.
Opportunity Density
Attractive opportunities exist in secular utility and analytics names, but specific segments require high selectivity due to divergent microeconomic indicators.
Time Horizon
The investment thesis is centered on long-term secular trends (such as water scarcity and regulatory investment cycles through 2030) rather than short-term trading patterns.
Top Conviction Themes
Key Catalysts
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