UN Unveils Groundwater Report on World Water Day | ETF Trends

On World Water Day, UN-Water Chairman and President of the International Fund for Agriculture Development Gilbert F. Houngbo unveiled a new report outlining the importance of groundwater. According to the UN World Water Development Report 2022, “Groundwater — Making the invisible visible,” groundwater accounts for roughly 99% of all liquid fresh water on Earth and could provide societies with tremendous social, economic, and environmental benefits.

The report describes the challenges and opportunities associated with the development, management, and governance of groundwater across the world, and aims to establish a clear understanding of the role that groundwater plays in daily life, its interactions with people, and the opportunities for optimizing its use.

“This year, World Water Day focuses on groundwater and its critical role in solving the water crisis,” said Houngbo in a video message, adding that groundwater “is our biggest source of liquid fresh water. It sustains our drinking water supplies, sanitations systems, farm industry, and ecosystems. But it has been overused, polluted, and neglected.”

Added Houngbo: “For policymakers in the water sector and beyond, groundwater may be out of sight. Now, we need to ensure it is not out of mind. We must fully integrate it into our action plans.”

Invesco has three ETFs that invest in companies that process and distribute water: the Invesco Water Resources ETF (PHO), the Invesco S&P Global Water Index ETF (CGW), and the Invesco Global Water ETF (PIO). PHO follows the NASDAQ OMX US Water Index, which “seeks to track the performance of US exchange-listed companies that create products designed to conserve and purify water for homes, businesses, and industries,” according to Invesco.

PHO taps into the theme of water investment with 38 stocks spread across 10 industry groups. The average market capitalization of PHO components is $35 billion, but the fund isn’t dependent on large-cap equities as a primary driver of returns.

CGW, which tracks the S&P Global Water Index, holds 50 stocks, and invests in water-related businesses such as water utilities, infrastructure, equipment, instruments, and materials.

PIO, which tracks the Nasdaq OMX Global Water Index, holds 52 stocks, and is positioned to benefit as the industrial and government cases for enhanced water management and technology expand. While PIO features exposure to seven global industry classification standard (GICS) sectors, industrial and utilities stocks usually loom large in water ETFs. According to issuer data, that’s also the case with PIO, as those two groups combine for 75.6% of the fund’s weight.

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