Do Water ETFs Have a Place In Your Portfolio? | ETF Trends

Water, our world’s essential building block and considered by some to be “the new oil,” is available to investors via exchange traded funds (ETFs) that cover the global water-business industry.

If you’re interested in water investing, the first step is determining which investment provides the necessary exposure, and then decide which fund adequately delivers on that, remarks Chuck Epstein for InvestorPlace. [Water ETFs: A Liquid Asset Play.]

There are two main reasons that water investing is an idea that has some heft:

  • It’s the third-largest industry in the world, following oil and gas production and electricity producers. The industry has been developing technology and infrastructure related to the purification, drainage, treatment and exploration of clean water to meet the world’s increasing demand.
  • The Organization of Economic Co-operation and Development projects that $15 trillion may be required for water infrastructure and related treatment services in 20 OECD member countries, plus the BRICs (Brazil, Russia, India and China).

Available ETFs cover water indexes and stocks of companies working in the water industry. Each available fund includes different weighting methodologies, underlying companies, re-balancing and company re-placement schedules. In the ETF Analyzer, there are four water ETFs. The primary differences between them amount to whether they’re global or domestic water funds, expense ratio and their level of exposure to various sectors under the water umbrella. Click on any ticker to see the ETF Resume for these funds.

  • PowerShares Water Resources Portfolio ETF (NYSEArca: PHO)
  • PowerShares Global Water Portfolio ETF (NYSEArca: PIO)
  • Guggenheim S&P Global Water Index (NYSEArca: CGW)
  • First Trust ISE Water Index Fund (NYSEArca: FIW)

On Dec. 1, the 14th annual Water Utilities Conference will cover topics that include the industry’s supply and demand, infrastructure, environmental regulation and advances in water tech, reports Shauntay Jones for MarketWatch. Improvements in the industry will mainly be driven by the world’s growing demand for water and the challenges of a diminishing supply. Water utility companies have been posting strong dividends, about 50% higher than the S&P on average, and the Janney Water Works Index has gained 5% year-over-year in the third quarter. [Water ETFs for a Global Crisis.]

For more information on water, visit our water category.

Max Chen contributed to this article.

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.