Best ETFs for Water
May 10th, 2012 at 3:30pm by Tom Lydon
The water investment theme can be played with exchange traded funds on a domestic or global level.
“As the world population increases, so does the demand for clean water. Global water consumption has increased nearly twice as fast as population growth in recent years. United Nations projections place global population growth at 30% by 2030, and as demand continues to grow accordingly, some projections place the water industry at a trillion-dollar market cap as early as 2020,” Abraham Bailin for Morningstar wrote in a recent analysis. [Rising Tide: Water ETFs]
PowerShares Water Resources (NYSEArca: PHO) tracks an index of industrial firms dealing primarily in the water space: water treatment, water utilities, pipe and pump manufacturing, and so on. This ETF does one of the better jobs in generating most revenue from the water industry, reports Bailin. [Water ETFs Soak Up Optimistic Industry Growth Forecasts]
Additionally, water infrastructure spending is hovering around $80 billion per year, and is most likely to double over the next few years, according to the World Water Council. The infrastructure investment theme is evident in developed nations, as the old systems in place must be upgraded and in fresh water-scarce emerging nations where systems have yet to be implemented, reports Eric Dutram for Zack’s. [Chart of the Day: Water ETFs]
Ultimately, water is becoming more limited on a global level, and about 3% of the water supply on Earth is fresh water. As the supply gets smaller and populations keep expanding, the need for potable water is evident. Companies and governments must come up with ideas to recycle, manage and desalinate water in the near future.
Various water ETFs:
- First Trust ISE Water (NYSEArca: FIW)
- Guggenheim S&P Water Global Water Fund (NYSEArca: CGW)
- PowerShares Global Water Portfolio (NYSEArca: PIO)
PowerShares Water Resources
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.