The underlying Tortoise Water Index is a rules-based, modified cap-weighted, float adjusted index designed to track water companies or companies that generate significant revenue from water infrastructure or water management, such as 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 form of smart beta indexing strategy, specifically a revenue-weighting methodology, where revenues from all potential index companies are scanned 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, which are then weighted to represent 70% of the total, and those with “indirect water exposure” will be weighted to represent 30% of the index.
TBLU’s sub-sector weights include 32% water management – 5% irrigation, 9% water efficiency and 18% water treatment, and 68% water infrastructure – 3% engineering & construction, 34% equipment and 31% water utilities.
Top holdings include Pentair PLC 7.8%, A.O. Smith Corp 7.7%, Aqua America 7.7%, Xylem 7.6% and American Water Works 7.4%.
Financial advisors who are interested in learning more about the water industry can register for the Tuesday, May 9 webcast here.