Water and its related exchange traded funds (ETFs) and stocks have been freestyling the markets faster than the S&P 500.

As almost half of the world is experiencing drought-like conditions, the shortages are not a mirage for companies engaged in water treatment, equipment, technology and services, reports Trang Ho for Investor’s Business Daily.

Instead of looking at water as a commodity, some suggest that it could be viewed as more of an infrastructure play. Water infrastructure is an industry with vast investment opportunities.

The most popular of the water ETFs, PowerShares Water Resources (PHO), has risen 1.8% year-to-date and is up 11.8% in the last six months.

It’s drowning out the S&P 500, which has sunk with a 13.2% loss year-to-date and a 12% drop in the past year.

Most other water ETFs have been performing well against the S&P, but are down year-to-date. If the water supply and demand remains tight, these funds could demonstrate their potential:

  • PowerShares Global Water (PIO): down 17.4% year-to-date
  • Claymore S&P Global Water (CGW): down 10.2% year-to-date
  • First Trust ISE Water (FIW): down 3.8% year-to-date

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

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.