Water ETF: New Index Helps Manage Water Risk | ETF Trends

Water may very well be the next oil, except that it is actually a necessity to life itself. A new Water Index will be implemented to help firms determine water risks in areas of interest, benefiting the water industry and related exchange traded funds (ETFs).

The United Nations projects that water demand will soon exceed supply, reports Steve Chiotakis for MarketPlace.

Jeff Fulgham of General Electric Water & Process Technologies commented that a new Water Index will detail the water risk across the board, along with the physical risks of available water to run an operation or meet the needs of a population.

Operations will be able to determine the water quality risks, regulatory risks and financial risks for a given geography. While this may add upfront costs to companies now, long-term goals would provide environmental checks that would eventually provide economic returns. [Do Water ETFs Have a Place In Your Portfolio?]

According to Wikipedia, there are already several incidences of water crisis. About 884 million people have inadequate access to safe drinking water. 2.5 billion people have inadequate access to water for sanitation and waste disposal, which is also a leading cause of death worldwide. Excessive groundwater extractions is leading to diminished crop yields and subsidence. Current usage of water is harming biodiversity. If regional conflicts over water scarcity continues, war could result.

China and India have very large water deficits, followed by smaller countries like Algeria, Egypt, Iran, Mexico and Pakistan.

For more information on water, visit our water category.

  • 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)

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.