Tortoise Index Solutions has expanded on its infrastructure theme with its second exchange traded fund that tracks water companies to capitalize on the potential needed investments to expand the water industries.
The newly launched Tortoise Water Fund (BATS: TBLU) will try to reflect the Tortoise Water Index. TBLU has a 0.40% expense ratio.
“Water is critical for economic growth and social stability. We believe that there is a tremendous need in the market for a quality index that accurately represents the water industry,” Jeremy Goff, Tortoise director, said in a note. “Creating this product is a natural extension of our strategy to provide essential asset solutions in wrappers that are desired by advisors and investors.”
The ETF will allow investors to benefit from the expected and much needed investment to rebuild existing infrastructure, construct new infrastructure and better manage and enhance the sustainability of the finite resource.
The Tortoise Water Index is a rules-based, modified cap-weighted, float adjusted index designed to track water companies or companies that derive significant revenue from either water infrastructure or water management, including public water distribution or supporting/enhancing water distribution infrastructure via equipment, engineering and/or consulting, along with water distribution and usage companies engaged in water efficiency, water treatment, and irrigation.
The underlying index also implements a revenue-weighting methodology where revenues from all potential index companies are collected annually from company 10-Ks or equivalents, and those with at least 50% of gross revenues from water related activities comprise the “direct water exposure” segment weighted to represent 70% of the total and those with “indirect water exposure” will be weighted to represent 30% of the index.
“We believe that our fund offers the purest exposure to the water industry by tracking an index that incorporates fundamental weighting factors that recognize and adjust for the fragmented nature of the water space,” Matthew Weglarz, portfolio manager for the fund, said in a note. “The urgent need for investment in this essential asset, and the infrastructure that supports it, is becoming increasingly recognized and our fund provides a more direct way for investors to access the opportunity.”
TBLU’s sub-sector weights include 31% water management – 5% irrigation, 10% water efficiency and 16% water treatment, and 69% water infrastructure – 3% engineering & construction, 32% equipment and 35% water utilities.
Top holdings include Cia Saneamento Basico Sponsored 7.8%, American Water Works 7.6%, Aqua America 7.6%, Smith A O 7.4%, Xylem 6.9% and Muller Water 4.3%.
For more information on new fund products, visit our new ETFs category.