Water is one of the most abundant resources on the planet but the potable fresh variety has become so scarce many funds are betting there is money to be made in H2O.Investment in water infrastructure by governments is expected to grow, which makes the sector particularly attractive at a time when equity, credit and commodity markets promise uncertain returns. The assets under management of Pictet & Cie, based in Geneva, which created the first water fund in 2000, were €2.4 billion at the end of last month. Its portfolio, which is invested across the world, mostly in North American, European and emerging markets, gained 11 per cent in the year up to the same period. The Sarasin Sustainable Water Fund expanded to €225 million at the end of April, having clocked up more than 9 per cent growth during that month and March. It is difficult to invest directly in water, so investors look mostly at utilities, manufacturers of infrastructure parts and technologies and consultants. The annual turnover of the water industry is worth about US$650bn. Among Pictet\'s top performers are Danaher, a water technology firm based in the United States, which represented 4.7 per cent of its fund as of May 31. Arcadis, a Dutch consultancy, design and engineering firm, was Bank Sarasin\'s top performer as of April 30. It was followed by Badger Meter, also based in the US, which manufactures water meters; Sabesp, a Sao Paolo state water utility; China Everbright International, an investment holding company that has interests in water projects; and Sulzer, a Swiss manufacturer of industrial equipment. Neither Sarasin nor Pictet invests directly in desalination plants as they invest only in listed companies. But companies such as Hyflux in Singapore and Suez Environnement in France provide Pictet with access to such projects and their growth prospects. Despite the boom in the water markets, investment challenges remain. \"The challenge is much more on the difficulty of predicting returns, as hikes in tariffs is a sensitive political issue in many countries,\" said Hans Peter Portner, a senior investment manager of water and utilities funds at Pictet.from the national.