The First Trust ISE Water ETF (NYSEArca: FIW) and PowerShares Water Resources Portfolio (NYSEArca: PHO) both track U.S. companies that derive their revenue from products that conserve and purify water.
As the world reviews the effects of climate change, global population growth and inadequate or aging infrastructures, investors can consider water industry-related exchange traded funds to capture potential long-term opportunities.
The World Energy Council estimates that total power demand for water is expected to rise 100 billion cubic meters by 2050. For instance, Asia faces challenges to water supply for power generation to meet growing population and associated power requirements. China alone is projected to see water demand rise 15% in the next 40 years.
FIW “also has heavy exposure to utilities and industrials, though its largest holding, Agilent Technologies (A) is a health-care company focusing on life sciences, diagnostics, and chemical analysis. The ETF is up 47% over the past year, buoyed by top holdings such as Brazilian water and sewage company Companhia de Saneamento Basico do Estado de São Paulo (SBS), up 129%,” according to Barron’s.