Investors can utilize water sector exchange traded funds to benefit from a parched country as a booming shale oil industry increases wastewater and heightened drought conditions dry up the West.
The First Trust ISE Water ETF (NYSEArca: FIW) and PowerShares Water Resources Portfolio (NYSEArca: PHO) both track U.S. companies that derive their revenue from products that conserve and purify water. [Water ETFs for Thirsty Investors]
FIW has a 0.60% expense ratio and PHO has a 0.61% expense ratio. Year-to-date, FIW is 0.5% lower and PHO is down 1.6%.
U.S. hydraulic-fracturing, or fracking, companies could triple spending on water treatment and reuse over the next six years to $357 million in 2020 from $138 million this year due to drought conditions that threaten supplies, reports Justin Doom for Bloomberg.
The industry is expected to spend almost $6.4 billion on water management, treatment, supply, transport and storage this year alone.
“We are going to see firms with advanced water-treatment technologies competing for business against diesel trucks over the next few years,” Erin Bonney Casey, a Bluefield analyst, said in the article. “Even though water treatment and reuse costs have proven to be nearly 15 percent lower than trucking and disposal in some cases, fracking companies have yet to fully embrace treatment.”
Fracking requires high-pressured water-based fluids to create cracks in rock formations for natural gas and petroleum extraction.