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%, 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.


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.