Thirsty for Returns? Gulp Up Some of the Water ETF

It’s being called one of the best ETFs to own in 2019. Investing in none other than water and using a ticker symbol with same name as a Vietnamese soup, the PHO ETF is up 26.55% this year. 

The Invesco Powershares Water Resources ETF (PHO) is based on the NASDAQ OMX US Water Index. It invests at least 90% of its assets in stocks and American depositary receipts and global depositary receipts of companies in the water industry that make up the underlying index, according to the fund’s fact sheet

The fund’s top holdings include Roper (8.30%), Ecolab (8.23%), Danaher (8.17%), Waters (8.16%), and American Water Works (8.06%). It’s primarily two of these holdings that have turbocharged PHO this year— Danaher and Roper.

“Danaher is up nearly 40% this year, effectively buoyed before and after what was a solid first quarter print, and bolstered by the impending acquisition of the General Electric (NYSE:GE) biopharma unit,” according to Investorplace. “Roper isn’t far behind Danaher, fueled by an equally impressive quarterly report.” 

But there’s more to PHO’s performance than just two of it’s holdings. Investorplace sums it up like this, “America’s entire water-management system is a mess.”

A couple of stats to back up the argument.
• The nation’s wasteful water infrastructure loses 6 billion gallons of water every day.
• Household water leaks can collectively waste an estimated trillion gallons of water per year.
• $1 trillion will be needed over the next couple of decades to shore up the country’s water woes.

PHO’s underlying index is set up to track companies that are positioned to help address the water debacle. 

According to the fund’s fact sheet, “The Underlying Index seeks to track the performance of US exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries.”

With a total expense ratio of 0.62%, the fund is not your average ETF and may require a long term mindset. 

As for this year, investors who picked PHO can drink to that. 

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