The water investment thesis has been validated in recent years and several exchange traded funds reflect as much. The Summit Water Infrastructure Multifactor Exchange Traded Fund (NYSEArca: WTRX) is one of the more unique options among water ETFs.
WTRX launched in August as the first smart beta alternative in the water ETF space. 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.
To be included in the underlying benchmark, companies have to be listed on a global stock exchange, have a market capitalization of no less than $200 million and have a three-month average daily trading value greater than $400,000.
“I like the asset class and believe it is a viable long term theme that will be around for generations. I am also a fan of focusing on the fundamentals for the constituents that make up the portfolio,” according to a Seeking Alpha analysis of WTRX. “The fund’s expense ratio is a bit on the higher side, however it is inline with other active or smart beta investments.”
WTRX has several established competitors.
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. The Guggenheim S&P Global Water Fund (NYSEArca: CGW) and PowerShares Global Water Portfolio (NYSEArca: PIO) both track companies that are associated with global water utilities, infrastructure, equipment, instruments and materials.
CGW, the first dedicated water ETF to trade in the U.S., tracks companies associated with the global demand for water, including water utilities, infrastructure, equipment, instruments and materials. PIO holds shares of companies that are associated with global water utilities, infrastructure, equipment, instruments and materials.
“For someone who is a fan of active investments in search of alpha, this fund can be looked at in conjunction with other active water investments such as mutual funds or the two unit investment trust series,” said Seeking Alpha of WTRX.
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.