Like the many other aging infrastructures across America, the U.S. water infrastructure is in dire need of updating and improvements. This opens up an exchange traded fund investment opportunity that could lead to one of the largest build outs ahead.
On the upcoming webcast, Dive into the Water ETF Space, Jeremy Goff, Director at Tortoise, and Matthew Weglarz, Director and Portfolio Manager at Tortoise Index Solutions, will dive into the water industry and consider ways to tap into a critical component of everyday life.
For example, the relatively new Tortoise Water Fund (BATS: TBLU) will try to reflect the Tortoise Water Index, tracking water companies to capitalize on the potential needed investments to expand the water industries.
The ETF will allow investors to benefit from the expected and much needed investments to rebuild existing infrastructure, construct new infrastructure and better manage and enhance the sustainability of the finite resource.
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.