Water is the world’s most valuable resource, used in nearly anything and everything you can think of. Investors who want to play the shortage of the commodity can easily do so with exchange traded funds (ETFs).
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)
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.