Individual Investors Seem to Gravitate to ETFs

The stock rating system on the Motley Fool is slowly seeing exchange traded funds (ETFs) making up the top ten. And now, six of the top ten stocks are actually ETFs.

Before we proceed, CAPS is the Motley Fool's rating system where investors work together and pool all their information to help you identify which stocks are the best to buy and when, along with which stocks to avoid.

Players rate stocks and predict which will under perform or outperform all the while The Fool keeps score and rates them. In turn, players receive ratings and based on the performance of their picks. The system is updated every five minutes, so the news is all current.

Todd Wenning for The Motley Fool gives us the top six ETFs as of May 13th, and reminds us that these are not formal recommendations, just start-ups to further your own research. In respective order:

• iShares MSCI Canada Index (EWC), up 6.7% year-to-date
• iShares MSCI Taiwan Index (EWT), up 10% year-to-date
• iShares MSCI South Africa Index (EWA), up 6.7% year-to-date
• SPDR S&P Emerging Middle East & Africa (GAF), up 1.5% year-to-date
• iShares MSCI Sweden Index (EWD), up 5.5% year-to-date
• PowerShares Global Water (PIO), down 6% year-to-date

It only underscores the popularity that ETFs have acquired with individual investors.

Wenning points out that some of the individual stocks in the ETF will outperform the ETF, but that's the trouble: how do you choose which stock to go after? Hindsight is 20/20. By investing in ETFs, you remove picking and choosing from the equation.

For the month of April, we had ETF industry growth. Will it keep up?

Protect Your ETF Portfolio If That Boom Goes Bust

When a particular "boom" goes "bust", what should investors do with their related exchange traded funds (ETFs)?

Gary Gordon for ETF Expert takes us back to 2000: the dot-com bulls were running rampant, convinced that the stock prices for those companies could do nothing but soar. In more recent years, the same craze spread through the real estate markets: the world is getting more crowded, there are fewer places to build and it can only send prices higher.

We all know very well by now how that turned out. But Gordon says that this isn't necessarily to suggest that the newest booming sector - commodities - is primed for a fall. But he does stress that investors should recognize the psychology of fear and greed.

It's a fact: booms go bust. Therefore, investors need to have a plan to sell.

Some resource ETFs are particularly attractive now, to be sure. Food is scarce. Water is scarce. Oil seems like it can't be stopped. Naturally, investors will be taking a look at such funds as S&P Metals and Mining (XME) or the PowerShares Water Resources Fund (PHO).

It's okay to get in those areas that are moving and above their trendlines. What's not okay is hanging on as it falls below that line or 8% off its high and hoping against hope that things will turn around.

Now that consumer spending is at a stand still and real estate investment trusts are unattractive, what do savvy investors do? They bargain hunt! There are values to be had if you look for them. For instance, the Vanguard REIT Index (VNQ) is above its long-term trendline and has outperformed the broader market for 2008. The Retail HOLDRs (RTH) has followed suit, sitting above its trendline.

For full disclosure, Tom Lydon's clients own shares of RTH.

Green ETF Marketplace In a Growth Spurt

When it comes to exchange traded funds(ETFs), is it in style to be green?

The clean energy market is growing faster than ever, and fund companies are right on the  money, launching so-called green funds. Some say that being green means being too narrow, too focused and just plain volatile.

Claymore S&P Global Water Fund (CGW) has been criticized for being too focused on small companies within a narrow sector. The fund is down 5.3% year-to-date. Likewise, the solar energy ETFs that have hit the market can also take the narrow path, with both the Claymore/Mac Global Solar Energy Index (TAN) and the Market Vectors Solar Energy (KWT) offering similar solar exposure, with the same expense ratios.

As Gary Gordon on ETF Expert  points out that, by definition, a sector fund is supposed to be concentrated. And as the awareness grows, the number and selection of funds will, too. That's the beauty of ETFs - you can pick and choose what works for you. It's been a rough year so far for this sector, but many are feeling optimistic about the long-term prospects as concern about global warming gathers steam.

Just be sure not to have your portfolio overweight in a particular sector, and always keep an eye on those areas that are performing. Protect yourself by not getting in until the 200-day moving average has been crossed and get back out when it drops below that line or 8% off its high.

Other green ETFs include:

• First Trust NASDAQ Clean Edge (QCLN), down 23.7% year-to-date
• Market Vectors Environmental Services (EVX), up 0.4% year-to-date

ETFs Might Benefit From Global Water Shortage

A water shortage has wide implications that hurts many while benefiting water-focused exchange traded funds (ETFs) in the long run.

In Yemen, Mohammed Nasser has had to change his way of life, abandoning traditional customs of hosting passer-by or politicians, now unable to supply essentials for his own family because of the water shortage affecting agriculture. Almigdad Mojalli for Yemen Times reports that 10 years ago, water was plentiful. Now, of the 20 wells that used to supply the village's water, only two are functioning.

A bit closer to home, Tim Teichgraeber for decanter reports that April frosts have caused widespread damage to vines in Northern California, and now a water shortage has hampered sprinkler usage in an effort to salvage them. Some of the more vulnerable vineyards are those that lack overhead sprinklers which protect the vines when temperatures go below freezing. Some sprinklers have used up the entire water supply for the season, too.

Around the world, in New South Wales, Australia, the drought is also taking a significant toll. The dams that supply water for irrigation to the large crops are dried up, causing many farmers to go without crops, and therefore, without income. Australia's failed rice crop will also affect the cereal and grain crop, reports Asa Wahlquist for The Australian.

The rice shortage has led to rationing in the United States and riots in Haiti and Egypt.

However, water is not quite like the other commodities, and has its own special set of circumstances. It's not priced on a global market, it's heavy and transporting it costs more than it's worth.

Water ETFs currently available are:

• PowerShares Water Resources (PHO), down 4.1% year-to-date
• Powershares Global Water (PIO), down 10% year-to-date
• Claymore S&P Global Water (CGW), down 5.6% year-to-date
• First Trust ISE Water (FIW), down 1.4% year-to-date

Why Aren't Water ETFs Soaring Along With Demand?

Water is one of the most important and necessary resources in the world - so why are exchange traded fund (ETF) investors having such a hard time making gains that are more in line with the soaring demand?

First Trust ISE Water (FIW) is down 6.4% year-to-date; PowerShares Global Water (PIO) is down 8.6% year-to-date; PowerShares Water Resources (PHO) is down 10.2% and Claymore S&P Global Water (CGW) is down 9.6%. Other scarce commodities, such as oil and wheat, are at record prices. What gives?

The fact of the matter is, water isn't like other commodities.

More than one in six people lack access to safe drinking water. The cost of treating and purifying water amounts to hundreds of billions each year. And access to clean water has been hurt by population growth and competition from industry and agriculture, say Carolyn Cui and Ann Davis for the Wall Street Journal.

But it's not so cut-and-dry. Water is not priced on a global market. It's heavy, and transporting it costs many more times its value. Depending on who you talk to, we're in a recession, and water use drops in one. Currently, 40% of fresh water in the United States is consumed in industrial applications.

Over the long run, things look better. The United Nations Population Fund sees global consumption of water doubling every 20 years. The power industry is one of the biggest users. The food industry use another big consumer: hundreds of gallons are used to produce 2.2 pounds of wheat.

Meanwhile, can the water shortage be helped by Segway inventor Dean Kamen's newest contraption, a water purifying machine?

ETF Tracking Error Is Sometimes a Necessary Evil

Logically, exchange traded funds (ETFs) should have minimal tracking error. That's because they track an index, and in theory, if the index zigs, so does the ETF - and vice versa. It's not always the case, though, and tracking error does occur.

Water ETFs From Every Perspective

The numerous water focused exchange traded funds (ETFs) actually give investors a play in two areas. From one perspective, water can be an infrastructure investment and from another, it can be a commodities play.

Gary Gordon for ETFExpert says that an argument for investing in water is that it is the most precious of all commodities on an international level. People need to drink clean water, and water is needed for crop irrigation in oder to produce food.

PowerShares Water Resources Portfolio (PHO) is actually an investment in infrastructure, Gordon says. The idea incorporates everything a society may do to use electricity, roads, communication networks, water transportation and the creation and maintenance of sewage systems. Equal weighting of small and mid cap companies make it a quick growth investment.

The Claymore S&P Global Water Index Fund (CGW) is an attempt to capture the global demand for the precious natural resource.

First Trust ISE Water Index Fund (FIW) plays on the idea that drinking water and waste services are in high need and will continue to grow.

Be sure to look closely into what each fund actually represents.

Grain ETFs Poised to Benefit From Several Angles

The solution: grain exchange traded funds (ETFs). What's the problem? A rising global population, a declining supply of fresh water, agriculture requiring more water (crops use about 80% of the U.S. supply) and a falling dollar are adding to the increasing global grain prices.

James Eckler for Seeing Alpha says that the grains, unlike gold and other commodities, don't rely on crisis or new homebuilding to gain success. Emerging middle class families will want  more and better food, and the grain ETFS are positioned to benefit from this.

For some exposure, take a look at:

• PowerShares DB Agriculture (DBA)
• Market Vectors Global Agribusiness (MOO)

For full disclosure, Tom Lydon's clients own shares of DBA.

Water ETF Quenches Investor's Thirst

Water is making waves as an exchange traded fund (ETF) investment and as a serious element in demand on a global level.

The forecast calls for 2025 to be the year when two-thirds of the global population will live in countries where water will be a scarce element. Climate change will exacerbate the problem, causing the water issue to cross over all boundaries, reports Toby Smith for TheStockAdvisors.

PowerShares Water Resources (PHO) should quench investor's thirst for a water-based ETF to capitalize on the threat that this natural resource will only continue to become more scarce. PHO gives exposure to highly-rated companies and each one represents no more than 4%.

Mr. Burns Might Like This: Nuclear ETF Poised For Demand

Despite a humble beginning, the nuclear energy exchange traded fund (ETF) could prove to be a useful investment.

Market Vector's Nuclear ETF (NLR) is down 8.9% year-to-date and has been down as much as 18% since its August 2007 inception.

However, nuclear energy is a window into the way of the future. Already, around 16% of the world's electrical energy comes from nuclear generation. Around 439 reactors are online and 222 are under planning or construction stages, reports Delbert Thiessen for ETFGuide.

Both emerging and developed countries are making energy demands that can only be met with  nuclear reactors. 

The timing of nuclear energy becoming more desirable is fortuitous: finding alternatives to oil, natural gas and coal is more important than ever in the fight against global warming. E-e-e-e-excellent.

Developing nuclear power is not without its problems. Among them: the mining process of uranium, the handling of nuclear waste and the use of billions of gallons of water in the process. There is some evidence, though, that nuclear waste can be recycled.

ETFs Narrow Their View

In 2007, more than 270 new exchange traded funds (ETFs) were launched, and half of these funds are niche or "specialty" funds. 

Eleanore Laise for The Wall Street Journal reports that few financial experts advise long-term allocations to these funds. Despite this, specialty ETFs attracted $7.7 billion in assets last year. For the future, investors can expect some of the ETFs to become even thinner, and this makes it all the more important to research what you are investing in. Investors must also avoid performance chasing with these narrow funds.

Some of these newer ETFs are handy to investors, but many of them can come with risk, as with any investment. Some of the narrow market segments that were introduced include water, agribusiness, nuclear energy and luxury goods.

Investors now have more options than ever, which is never a bad thing. The advent of these narrow funds give all of them choices, which actually works in their favor.

Bear's Giant Claw Hits Utilities ETFs

Exchange traded fund (ETF) investors, naturally, are looking to shield themselves from the roar of the bear. Most defensive hideouts are not safe, as even utility exchange traded funds (ETFs) are reeling.

Joanne Von Alroth for Investor's Business Daily reports that along with commodities and agribusiness, utilities are perceived as a safe haven. After all, people need water, gas and electricity.

Over the first 12 trading days of January, utilities ETFs still had the top-performance spot, and the decline was slow at 2.5%.

Last week, the panic began. Utilities, basic materials and energy all fell. The biggest slide came Tuesday, after the emergency rate cut by the Federal Reserve. The interest rate fear, mixed with recession worries have affected, among others:

• iShares Dow Jones U.S. Utilities (IDU)
• Vanguard Utilities (VPU)
  

Both funds experienced slides of up to 3.5%. The fear is undermined by the threat of global infection from the U.S. markets.

Water ETF-The Next Liquid Gold?

As water becomes more scarce and the world is hit hard by drought, now could be the time to look toward the exchange traded fund (ETF) that tracks the resource.

Charles Wheelan at Yahoo! Finance wonders if the U.S. is paying enough attention to increasing water shortage issues. He points out that skyrocketing oil prices have caught people off guard -- imagine if we could have the same foresight when it comes to water.

It's no secret that the U.S. has its water issues and as Wheelan explains the Southwest has been developing communities non-stop complete with desert swimming pools and lawns, and the Southeast was in a drought most of the fall. Even the Great Lakes are drying up as most of the water drawn up is not returned.

Consider the great political and turmoil and economic costs caused by the shortage of oil over the past century. Water - a clear liquid gold, could be next.

• PowerShares Water Resources (PHO) up 20% year to date
• Claymore S&P Global Water (CGW) up 4.4% since May launch
• PowerShares Global Water (PIO) up 2.1% since June launch
• First Trust ISE Water (FIW) up 12.2% since May launch

ETFs Flow Clean Water For The Future

Jonathon Greenblatt wants to change the world and help exchange traded funds (ETFs), one bottled water at a time. He is the co-founder of Ethos water, a business whose mission is to provide the world's children with clean drinking water. This local enterprise started in health clubs, schools and cafes. It then went on to Whole Foods before eventually coming to Starbucks, reports Lara Seligman for The Daily Pennsylvanian. In fact, every bottle of Ethos water sold in Starbucks will donate 5 cents to the global water crisis, giving drinking water to countries in need.

On the government side, Congress is negotiating the Clean Water Restoration Act H.R.2421. The outcome would give the Federal government the right to gauge how normal activities affect every drop of water that falls on your land, reports Jonathon Youngberg for AGWeekly. Federal bureaucrats could visit farms, ranches and even your very own lawn to see how, say, altering how your lawn slopes, changes how rainwater runs off.

This is a bit extreme and there is an easier way to help the water crisis and make sure your energy goes into companies that help secure clean drinking water here and abroad. Many of the clean water ETFs invest in companies that manufacture clean drinking water, and make the machinery for purification and distribution.

An ETF to take a look at if this is an issue that concerns you is PowerShares Water Resources (PHO), which is up 16.36% year-to-date. 

Water ETFs Could Be Healthy for Portfolios

Exchange traded funds (ETFs) that invest in water generally are performing well because water has become a commodity of limited supply and unlimited demand. In fact, water available for human consumption represents less than 1% of all water on the planet, while the renewable supply has fallen by almost 60%, reports Palash Ghosh for BusinessWeek. "Only 20% of the global population has access to running water and 40% has no access to clean water or sanitation," says one water expert. "Within 50 years, more than half of the entire earth's population of more than 9 billion will be living with water shortages affecting 80 countries, including the U.S."

Experts expect spending on U.S. water infrastructure to accelerate because the Environmental Protection Agency (EPA) declared that at least 25% of the nation's pipes are in poor condition and by 2020, that number is expected to increase to 45%. These massive improvement projects could be another major boost to water ETFs.

Another problem that water supplies face is in emerging-market countries like China. China has more than a fifth of the world's population, but only 7% of its fresh water supply. In addition, China's water is so polluted that less than 15% of the nation's population has access to safe drinking water. Below are some of the water ETFs:

• PowerShares Water Resources Portfolio (PHO)
  This ETF tracks the Palisades Water Index. Currently, it's up 21.2% year-to-date.
• First Trust ISE Water Index (FIW)
  FIW tracks the ISE Water Index. Currently, it's up 5.7% for the last three months, having launched in May.
• PowerShares Global Water Portfolio (PIO)
  PIO serves as an international variant of PHO. It invests in Britain, Japan and the U.S. It also tracks the Palisades Water Index. Currently, PIO is up 0.6% for the last three months, having launched in June.
• Claymore S&P Global Water ETF (CGW)
  This ETF tracks S&P Global Water Index, which is invested equally between two separate types of water-related businesses: water utilities and infrastructure, and water equipment and materials. Currently, CGW is up 1.3% for the last three months, having launched in May.

Swimming in Water ETFs

Many exchange traded funds (ETFs) are available that focus on one of the world's most precious resources: water. In fact, consumers seem to be willing to pay more for a bottle of water than a can of soda, reports Matt Krantz for USA Today. Water ETFs invest in a basket of different water companies. One of the benefits of owning water ETFs versus a single stock is that investors get exposure to many companies, which reduces risk. A few water ETFs and their performance year-to-date include:

• PowerShares Water Resources Portfolio (PHO) - up 20.4%
• First Trust ISE Water Index (FIW) - up 3.3% for the last three months, having launched in May
• PowerShares Global Water Portfolio (PIO) - down 1.8% for the last three months, having launched in June
• Claymore S&P Global Water ETF (CGW) - down 0.2% for the last three months, having launched in May

Water ETFs Supply a Resource

Exchange traded funds (ETFs) can help when commodities run scarce. For example, like many other resources worldwide, the supply of water is shrinking. Yet some ETFs invest in companies working to solve this problem.

A few ETFs that invest in water-related companies include PowerShares Water Resources (PHO), PowerShares Global Water (PIO) and the Claymore S&P Global Water Index ETF (CGW). PHO tracks the Palisades Water Index that represents the performance of companies in the global water industry that provide portable water and water treatment services. It's top holding, Valmont Industries (VMI) has been a storing performer since August 2005. It's revenue grew 18.7% in the second quarter of 2007 over the year-earlier period, exceeding the industry average of 4.6%, TheStreet.com Ratings Staff reports. Currently, PHO is up 12.3% year-to-date. Although PIO is new, it hopes to follow in PHO's footsteps. Having just launched in June, PIO is up 0.9% for the month. It also invests in water-service companies and its holdings are equally weighted. CWG launched in May and is currently down 1.6% for the month.

Like some other commodity ETFs, PHO and PIO are more narrowly-focused, which can make them more susceptible to volatility. Study these ETFs to see if they fit in your financial portfolio.

Possible ETF Safe Havens in Water and Blue Chips

As volatility continues to rule the markets and exchange traded funds (ETFs), investors are scattering to seemingly safer securities. As we've mentioned previously, bond ETFs, "megacaps," health care, consumer-focused ETFs and global industrial ETFs have the potential to offer some relief. In addition to those, here are a couple of other options for the wary investor, according to David Budworth for the Times Online.

• Water ETFs
  Similar to our other aforementioned ETFs, water ETFs such as the Claymore S&P Global Water (CGW), generally don't follow market trends because water is a survival necessity. In addition, water has long-term growth potential because as populations grow, so does the demand for H20. Other water ETFs include PowerShares Global Water Portfolio (PIO), First Trust ISE Water Index Fund (FIW) and PowerShares Water Resources (PHO).
• ETFs with Blue Chip Stocks
  "Blue chips" refer to large-cap and "megacap" stocks as well as stocks that pay dividends. An example of an ETF that holds a lot of these stocks is the well-known DIAMONDS Trust, Series 1 (DIA). These ETFs provide relief through their guaranteed dividends as well as their financial sturdiness compared to nondividend ETFs.

For full disclosure, some of Tom Lydon's clients own DIA.

Bridging Your Investments to Infrastructure Through ETFs

No single exchange traded fund (ETF) exists that is a pure play on infrastructure. Last week's disaster of the Minneapolis bridge collapse brings to mind how much repair and money is needed to alleviate this shortcoming. The American Society of Civil Engineers (ASCE) rated 27% of the country's 90,750 bridges structurally deficient or they functionally obsolete. It will cost $9.4 billion a year for 20 years to fix all the problems, reports the ASCE. Trang Ho for Investor's Business Daily reports that when the government pours trillions of dollars into something, many companies can capitalize.

Some ETFs to bridge government infrastructure spending and your investments include SPDRs Macquerie Global Infrastructure 100 (GII) and the PowerShares Global Water Portfolio (PIO). Although GII holdings are mostly utilities, many are engaged in engineering and development. PowerShares Building and Construction Portfolio (PKB) can be another way to access development, however, 12% is concentrated in consumer and home-building names.

H2O ETFs: Watch Them Flow

Purified water exchange traded funds (ETFs) are fairly new. One of the reasons for their development is because modern-day developing nations have regular shortages of purified water for drinking and agriculture. The United States is not safe from this shortage either, reports Lawrence Carrel for TheStreet.com.

Three new water-related ETFs were released in the past two months. They focus on companies that provide portable water, water treatment and other technologies that relate to water consumption.

• First Trust ISE Water Index Fund (FIW) - holds top 36 stocks in the industry
• Claymore S&P Global Water Index (CGW) - comprises 50 global companies from developed markets
• PowerShares Global Water Portfolio (PIO) - includes global companies based on equal weighting

These ETFs hope to follow in the footsteps of PowerShares Water Resources Portfolio (PHO) that has been around since December of 2005. It's up 15.8% year-to-date.

Swim With The Fish In A Water ETF

Water has become so scarce that it is now being called a commodity- and there are even exchange traded funds (ETFs) that give investors exposure to it. Companies are hoping to take advantage of shortages in clean water. John Waggoner for USAToday reports there are various reasons water is an investment opportunity, including the fact 450 million people in 29 different countries suffer from water shortages. Also, 20% of people in the world lack access to safe and clean drinking water. By 2025, it is projected that 28 billion people will live in areas with scarce water sources.

One way to play this drought is with the PowerShares Water Resources (PHO) which has assets reaching $1.7 billion in just 2 years. The companies in this ETF are involved with the treatment and technology of potable water.  Another liquid ETF is the Claymore S&P Global Water Index Fund (CGW). CGW follows the performance of 50 global equity securities from developed markets of companies that are involved in water-related businesses.

While you are fishing for an investment in water, use caution as there is no lifeguard on duty. Water is a specialized sector so these do your scouting and make sure it fits in your portfolio.

Global Liquid ETF Available

Exchange traded funds (ETFs) are often touted for their liquidity, but now there is a new truly "liquid" ETF, Claymore S&P Global Water Index (CGW).  The ETF launched this week includes both water utilities and infrastructure, and water equipment and materials companies.  The ETF is consists of 50 stocks in developed markets around the world, as research points to a global need for clean water.

There is another water ETF available, PowerShares Water Resources (PHO), launched in December 2005.  This ETF tracks companies with a focus on the provision of portable water, water treatment and water consumption technology.  There are international holdings, but many are small cap water infrastructure companies, such as purification facilities.  PHO is up 6% year-to-date.

Water ETF Drenches Investors In Opportunity

Water is as precious to an investor as gold, especially because it is the one commodity nobody can live without. An exchange traded fund (ETF) with a water focus can be an opportunity for investors.  Fresh water supplies are being exhausted in many locales across the globe as the world's population is growing at a 2% rate. Here in the U.S. water supplies are under pressure in California, Hawaii and parts of the Southwest. TheStreet.com reports wells are contaminated or exhausted and river water supplies are becoming rare.

Water entrepreneurs are seeing the opportunity as public awareness is growing. One example is General Electric (GE) bought water filtration company Zenon Environmental Corp. for $656 million. Ice Rocks are another huge invention, a high-end spring water ice-cube line, which could capture the luxury end of the American bottled water market. The water ETF is PowerShares Water Resources (PHO), up 9% over the past 6 months.

Water ETF Is Calm

The water theme for an exchange traded fund (ETF) has been catching on, but slowly. Could water be the next oil-a commodity with huge price appreciation potential, ponders Brett Steenbarger of Trading Markets.com.  The PowerShares Water Resources ETF (PHO) is based on the Palisades Water Index that tracks companies which focus on the provision of portable water, water treatment and water consumption technology. PHO has been strongly correlated to its small-cap stocks and peaked at its price rise in April 2006. It has since recovered from the market decline last May.  Investors should keep an eye on PHO and be sure to sell when it's below average.

Water ETF Looks Clean

There is an exchange traded fund (ETF) opportunity for investors to bank on the water theme, PowerShares Water Resources (PHO).  PHO tracks the Palisades Water Index, which invests in the common stocks of companies in the water industry, reports Jonathan Bernstein of ETFZone.com. PHO is heavily weighted in the industrial sector, utilities and business services. The fund has international holdings, but many holdings are small cap water infrastructure companies, such as purification facilities. 

Clean water is already scarce and has become a commodity. With the current degradation of the natural resource, especially in emerging markets areas of the world, the lack of incentive to protect it is still not intense. Therefore, clean water must either be found, or efficiently(cost) made. This is where there is opportunity for investors.

Water ETF (PHO) - Glass Half Full

Russell Bailyn writes for Seeking Alpha about the macroeconomic case for investing in water. See article here. The PowerShares Water Portfolio (PHO) has moved up 5% since then, and I still believe it plays a crucial role in most portfolios. He lists his reasons why he's in favor of water investment.

Water ETF (PHO) Flowing to Investors

There are still parts of the developing world that do not have access to piped water.   In fact, only 11% of households in India do and China is another country facing delivery problems.  As these country's economy expand, this provides opportunity for growth in water delivery around the world.  Another area of growth is within the U.S.  As most pipes in the country are over 100 years old they will need to be repaired or replaced.

The exchange traded fund, PowerShares Water Resources (PHO) allows for investors to take part in the delivery expansion.  The ETF follows the Palisades Water Index and is comprised of utility, treatment, infrastructure, analytical, resource management and conglomerate companies.  This diversification within the sector touches each aspect of the water delivery system.  Top holdings include Calgon Carbon (CCC), Consolidated Water (CWCO), and Pentair (PNR).  PHO is up 20% year-to-date.

New Water ETF Creates Liquidity

Today, PowerShares is launching a new ETF which focuses on water resources.  The PowerShares Water Resources Portfolio (PHO) will track the Palisades Water Index (ZWI) and will invest in companies involved with the treatment and technology of potable water. 

Why would they create an ETF so narrowly focused on water?  Global water consumption is growing twice as fast as the population and a UN report says that 2 billion people worldwide will face severe water shortages by the year 2025 if water consumptopn remains at the same rate.  Hydrogen Ventures estmates that with the need of more water, it will take about $660 billion over the next 20 years to develop water infrastructure.