Water is not, at least not yet, a tradeable commodity on par with the likes of gold or oil, but the water investment thesis has been gaining momentum in recent years. Providers of exchange traded funds have obliged that momentum with several products that help investors tap various water-related investments.
The Guggenheim S&P Global Water Fund (NYSEArca: CGW) and PowerShares Global Water Portfolio (NYSEArca: PIO), which both track companies that are associated with global water utilities, infrastructure, equipment, instruments and materials, are up 18.1% and 15.7%, respectively, over the past year.
CGW “launched in May 2007, tracks 50 companies with water-related businesses. Roughly half of the group is in infrastructure and utilities, such as American Water Works (AWK). The other half falls into the category of materials and equipment, including top holding Geberit (GBRY), a Swiss manufacturer and supplier of sanitary parts and systems used in construction,” reports Sarah Max for Barron’s.
The Summit Water Infrastructure Multifactor Exchange Traded Fund (NYSEArca: WTRX) debuted in August as the first smart beta alternative to traditional water ETFs.
WTRX follows the Summit Zacks Global Water Index, which provides exposure to 30 to 50 companies engaged in the global water industry. Specifically, the underlying index will utilize a rules-based indexing methodology to incorporate fundamental factors that have been strong historical indicators of the long-term performance of water equities.