The state of the water industry at the moment makes it difficult for investors to single out a few good water stocks, so an ETF can make much more sense. Cheryl Hall for The Dallas Morning News reports that water is the third-largest industry in the world, but it remains fragmented and diverse. (For more information on water, click here).

A market basket approach makes the most sense. ETFs are highly transparent so you know what you’re getting, and the expenses are much lower than a typical mutual fund. You also get diversity within a sector. (Go here to read more about the benefits of ETFs).

The profitability aspect is something else. One could argue that the technology sector is more profitable and proven now, compared to the water industry and water-related ETFs. Iif you feel supply and demand is going to get more attention, you may be a little early, but from a long-term stance, looking at water might be worthwhile.

• PowerShares Water Portfolio (NYSEArca: PHO)

• PowerShares Global Water (NYSEArca: PIO)

• Claymore S&P Global Water (NYSEArca: CGW)

• First Trust ISE Water Fund (NYSEArca: FIW)
  

There are talks about a profit bridge appearing as the stimulus dollars filter through the U.S. economy. Nick Hodge for Energy and Capital reports that $11 billion has been allocated to revamping the U.S. water supply, which could ultimately lead to a profit bridge.

The potential to profit from water comes from many areas, including:

• Drinking water infrastructure and the machines needed to make potable water
• Waste water infrastructure improvements and additions
• State-wide projects and funding for clean drinking water infrastructure projects

About $4 billion has already been delegated to water-related improvements in every state, with another $7 billion in the wings to go toward new water meters ad building more treatment plants.

ETFs are still the best way to access this sector, since trying to choose companies individually could be a time-consuming challenge for most investors.

• PowerShares Water Resources Fud (NYSEArca: PHO): up 18.2% year-to-date



• PowerShares Global Water (NYSEArca: PIO): up 32.5% year-to-date



• First Trust ISE Water Index Fund (NYSEArca: FIW): up 17.5% year-to-date



• Claymore S&P Global Water Index (NYSEArca: CGW): up 26% year-to-date

For more stories about water, visit our water category.

From a supply and demand perspective, demand for water far outweighs supply.  The World Health Organization (WHO) estimates that 1.1 billion people don’t have access to improved drinking water and 2.6 billion live without proper means of sanitation.  To put in into perspective, China accounts for 22% of the world’s population and only 8% of its water, states Loyd Eskildson of Basil and Spice.

Global warming will only add to the world’s water problems because of more flooding in some areas, which will result in the spread of fertilizer and sewage. Other areas will be hit by drought.

For these reasons, some believe that water-related clean-tech companies are the way to go.  One venture capital firm, Kleiner, Perkins, Cauflied & Byers, has made its first major significant investment into Applied Process Technology (APT) which makes water remediation technology that removes agricultural nitrates from well water, reports Camille Rickets of Green Belt.

Europe has been leading the pack in the water space for a while now, while the United States has opted to focus cleantech investing on renewable energy sources, transportation applications and the smart grid.

• PowerShares Global Water Portfolio (PIO):up 19.8% year-to-date

• PowerShares Water Resources Port (PHO): which is up 7.4% year-to-date

• Claymore S&P Global Water Index ETF (CGW): up 18.3% year-to-date

For more stories on water, visit our water category.

Kevin Grewal contributed to this article.

With $15 billion in stimulus money flowing into the $400 billion water market, many are wondering what the ultimate impact is going to be. Water market experts feel that it could make the industry attractive to investors.

Michael Szabo for Reuters reports that other factors supporting a water investment include:

• Growing water scarcity
• Soaring water demand, because of growing populations and higher living standards
• Climate change

Stimulus money in other countries has also been deployed to the water sector, as well. In the past, firms such as General Electric (GE), 3M (MMM) and Siemens (SI) have actively invested in companies that monitor, manage and improve water supplies. Now government stimulus cash is delivering the latest boost.

Meanwhile, cost-effective strategies are being developed through the latest technologies and metering water use, treating waste water for reuse and desalinating sea water are high on the list of possibilities.

ETFs that access these areas of water investment:

• PowerShares Water Resources (PHO): down 4.9% year-to-date

• PowerShares Global Water Portfolio (PIO): up 8.1% year-to-date

• Claymore S&P Global Water Index (CGW): up 4.3% year-to-date

• First Trust ISE Water Index Fund (FIW): down 3.6% year-to-date

For more stories about water, visit our water category.

For investors interested in the water sector, there are many options as far as ETFs are concerned. Getting exposure to companies involved in the conservation and creation of potable water, to the companies that supply the machinery to make this possible are all ways to profit from water, explains Green Investing Now.

As conservation becomes key to create sustainable businesses, the current business model used now may be transformed into a more sustainable production process.

Here are a few of the related ETFs to choose from:

• PowerShares Global Water Portfolio (PIO): expense ratio 0.75%; this ETF is international, with a 30.7% weighting in the United States. It seeks to replicate the performance of the Palisades Global Water Index.

• PowerShares Water Resources Portfolio (PHO): expense ratio 0.66%; this ETF focuses on the provision of potable water, the treatment of water and technology and services directly related to water consumption.

• Claymore S&P Global Water ETF (CGW): expense ratio 0.65%; the companies in this ETF are associated with demand of water, water utilities, infrastructure, equipment, instruments and materials. The index focuses on global developed markets.

• First Trust ISE Water Index Fund (FIW): expense ratio is 0.77%; the index includes the top 36 stocks in the industry and the portfolio is balanced twice a year.

For more stories on water, visit our water category.

Since 2000, the Middle East has seen growth above 5% and has become the second richest part of the emerging world, according to ETF Grind. But Mideast economies were slower to recover in the beginning of 2009 and there were concerns over the ability of the region to pay down debt accumulated in the good years.

Over the long-term period, there are several ETFs that an interested investor could keep an eye on:

• iShares MSCI Turkey Invest Mkt Index (TUR): up 30.9% year-to-date. Turkey’s economy isn’t tied too heavily to oil. It remains dependent on exports to the EU. The country’s industrial sector can profit from its close proximity to oil producers.
• Market Vectors Agribusiness ETF (MOO): up 36.6% year-to-date. Economic develpment and population growth would make the Middle East would effect global food demand more than elsewhere since the region has little arable land. Middle Eastern countries are already securing land for a steady food supply and will need the necessary equipment and supplies.
• PowerShares Global Water (PIO): up 10.8% year-to-date. Needless to say, the region has a scarcity of freshwater. The Middle East has the biggest market for desalinization plants and expensive water engineering projects. PIO holds 29 global water resource firms.
• Market Vectors Gulf States ETF (MES): up 15.4% year-to-date. MES covers Middle Eastern countries that border the Persian Gulf. It is weighted toward finance, real estate and services. Its expense ratio is 1.00, but it is a pure play on oil related economies.
• iShares MSCI Israel Cap Invest Mkt Index (EIS): up 33.5% year-to-date. Israel has reputable pharmaceutical and tech sectors.
• Claymore/Robb Report Global Luxury (ROB): up 13.3% year-to-date. When crude oil rises again, Middle Eastern royals will be swiping their super platinum cards in purchasing luxury goods.
• PowerShares MENA Frontier Countries (PMNA): up 15.9% year-to-date. PMNA is similar to GULF but excludes gulf nations of Qatar, Bahrain, and Oman. It also has a higher expense ratio. It is broadly diversified with Morocco and Egyptian firms. The fund mainly invests in large and mid caps.
• Claymore/Delta Global Shipping (SEA): up 31.8% year-to-date. Recovery in oil prices and Middle East production could translate into strong earnings for global shippers. Crude oil makes up aruond 1/6 of global trade.
• WisdomTree Middle East Dividend (GULF): up 8.4% year-to-date. GULF has a broad market Middle East and North Africa exposure. It has a wider selection of holdings than PMNA or MES, a lower expense ratio, and is dividend weighted rather than capitalization weighted. But the funds competition, GULF is a little low on volume.
• iShares Dow Jones U.S. Oil Equipment Index (IEZ): up 39.7% year-to-date. Major equipment and service companies included in this fund have business in the Middle East. IEZ has outperformed crude oil ETFs and indexes of major integrated oil companies year-to-date.

As always, watch the trend lines to see what actually materializes.

For more stories on the Middle East, visit our Middle East category.

For full disclosure, Tom Lydon’s clients own shares of MOO.

Max Chen contributed to this article.

FP Trading Desk for Seeking Alpha explains that water usage is rising all over the world. Changing diet patterns, primarily to a shift toward more meat consumption, doubles the need for water for production relative to a vegetarian diet. Energy production also requires water, and it’s an area that’s projected to see very rapid growth in the next few decades.

There are specific areas that can be accessed through ETFs for investment in the water shortage. Water-related businesses, such as those that work to build up infrastructure, is one area. Another is water filtration, making potable water clean for drinking.

• PowerShares Water Resources (PHO): up 4.5% year-to-date

• PowerShares Global Water (PIO) up 11.3% year-to-date



• Claymore S&P Water (CGW): up 9.6% year-to-date

Earlier-than-expected rapid melting of snowpacks is attributed to dust storms that deposit dirt and sand on snowy mountain tops, which would then allow the darker snow to absorb more heat and sunlight, reports Scott Streater for The New York Times. This has officials worried over water shortages that would occur in late summer.

Thousands of farmers and ranchers depend on slowly melting snowpacks to provide a steady source of water through the year.

The growing problem of dust storms may further grow as grazing, mining and recreational use destroy vegetation and expose soil to winds.

Some seek to introduce native grass or other soil-stabilizing vegetation across regions afflicted. In China, mats were created to try and help stabilize the subsurface and hold down the shifting dunes. Local governments and power companies have also spent millions trying to disburse seed clouds to increase snow on high-elevation mountains.

As we work to find a solution to this problem, and the larger problem of global warming, water industry-focused ETFs could benefit:

• PowerShares Global Water (PIO): up 2.6% year-to-date

• Claymore S&P Global Water (CGW): down 1.3% year-to-date

Max Chen contributed to this article.

A new report from TechKNOWLEDGEy Strategy Group takes a look at the state of the water industry, and there are some opportunities knocking if you look in the right places. TechKNOWLEDGEy Strategic Group (TSG) is a Colorado-based independent investment banking and management consulting firm that evaluates and takes action upon growth strategies within environmental industries.

The group reports that the year 2008-2009 could be looked upon as a turning point within the water industry. There is a changing in the mindset of every U.S. citizen and a transformation in American politics as well as interest in environmental and energy policy.

Among the recent trends in the water industry the report mentions are:

• Water investments will gain attention as the economy falters. Water is beginning to be recognized as an alternative store of value, and water won’t be as badly affected by the crisis as other investments.
• There will be a renewed focus on the environment. There is heightened interest in water and the environment overall, thanks to the Obama administration. The industry is eagerly watching for what affect the stimulus plans will have on the industry over the next few years. Our water infrastructure is dilapidated.
• Water and global food production will get more attention. Food prices are rising quickly, causing many to take a look at how we’re using water. Are we being efficient? Could we be doing better?
• Water to make oil, and vice versa. Where water and energy intersect, there are challenges. It takes water to produce energy, and energy to treat and move water around. Demand for one could cripple the other.
• There could be more consolidation of municipal water and wastewater facilities in the future.

It is no secret that water is an essential part of everybody’s daily life and crucial for our existence. Water has since been recognized as a valuable commodity, and there are broad and specific ETF products for investors to harness the opportunity to invest in this resource. The following ETFs also function as a means for investors to gain exposure to the various roles that water plays: industry function, politics, worldwide health, value within the global financial infrastructure.

The full report can be viewed here.

• PowerShares Global Water (PIO): down 8.5% year-to-date

• Claymore S&P Global Water (CGW): down 9.5% year-to-date

In the 5th World Water Forum, more than 27,000 people from 120 or more countries will meet to discuss ways to adapt the water sector to face climate change, lack of sanitation and dearth of drinking water in many developing countries, along with increase demand for water for basic consumption and in water-intensive energy technologies, reports Lauren Morello for The New York Times.

Historically, water managers looked at records of streamflow, rainfall, and snowpack to determine if communities have enough water for everyday needs. Climate change is changing the regular patterns, which could mean more severe droughts or floods, and it is causing different melting periods for glaciers and snowpacks.

Periods of drought coupled with increased demand for water have been detrimental on all sources of water. The European Environment Agency released a report that states Europe is “living beyond its means” in regards to water use. It is predicted that climate change will create worsening conditions in water sources, along with more frequent and severe droughts across Europe.

These dire conditions could lead to more demand for the companies contained within the underlying indexes of water ETFs. Holdings consist of companies that focus on the provision of potable water, treat water, as well as technologies and services that directly relate to water consumption.

• PowerShares Global Water (PIO): down 0.4% for the last week; up 10.7% in the past two weeks
  

• PowerShares Water Resources (PHO): up 0.6% in the last week; up 4.1% in the last month
  

Max Chen contributed to this article.