Water ETFs: The Next Wave of Big Business? | ETF Trends

Keeping water clean is a big business, and one of the biggest IPOs this year has been a water treatment equipment company based in China. Specialized commodities such as water are giving Wall Street and related exchange traded funds (ETFs)  something to ponder.

Water has become the most valuable resource of the 21st century. Its value touches down upon all socioeconomic aspects of civilization and is used in nearly every industry. The recent success of Douyun Global Water (NYSE: DGW) in China is evidence of the desire investors have to hold companies focused on finding and creating clean water, reports Barabara Kollmeyer for MarketWatch. (Will water be the next gold?)

Duoyuan shares have nearly doubled since their successful June debut. Duoyuan offers a direct play into the core themes of water investing: growing global populations and dwindling supplies of a vital commodity.

In the United States, the need for water is just as critical. States such as Texas are projected to double their populations within the next 50 years. The water shortage in the United States is alarming and lawmakers and water planners are trying to raise awareness about the issue, reports John McFarland for  Associated Press.

Another aspect of water is sewage and treatment of potable water. Charles Duhigg for The New York Times reports that upgraded sewage and wastewater treatment plants are overflowing, when even a slight rain falls in New York. This causes sewage to spill into waterways and contaminate drinking water. Fewer than one in five sewage systems that broke the law in overfilling were ever fined or otherwise sanctioned by state or federal regulators, the Times analysis shows. (How can water ETFs equal profits?)

As cities grow quickly and populations double, this issue needs to be regulated and addressed, and opens a need for the investment in treatment plants to stop waste from overflowing and drifting just upstream near drinking water intake points.

For more stories about water, visit our water category.

  • PowerShares Water Resources (NYSEArca: PHO): up 13% year-to-date
  • PowerShares Global Water (NYSEArca: PIO): up 34.5% year-to-date
  • Claymore S&P Global Water (NYSEArca: CGW): up 26.7% year-to-date

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.