5 Water ETFs To Invest In

By John Szramiak of Vintage Value Investing

Global Water Index

cocoparisienne / Pixabay

Water is one of the most plentiful compounds on Earth and it is essential for life.However, fresh water isn’t nearly as common as salt water and it is under pressure. As climate change rapidly shifts the weather pattern, fresh water is drying up. At the same time, pollution, garbage and industrial waste are destroying existing water basins.

This is especially true in some large, poor countries with desperate need for fresh water including India, China, Bangladesh and Mexico. Even in the US, the Colorado river which supplies fresh water to 40 million people in the Southwest is rapidly drying up. For that reason, water storage, infrastructure and purification has become a hot investment theme. These companies offer increasing shareholder value over the long term. See: How to Invest in Water like Dr. Michael Burry from The Big Short.

While the sector is still relatively small, there are several water ETFs which are particularly good at taking advantage of this trend.

1. PowerShares Water Resource Portfolio (PHO)

PHO is one of the largest water ETFs with $750 million under management. It invests in 37 different companies that are mostly based or focused on the US market. The companies are generally mid-sized and the top 10 firms comprise 60% of the fund. American Water Works is one of the largest holdings. It is a water focused utility that provides water infrastructure to towns and cities. Roper Technologies is another large holding. It provides equipment and engineered solutions to companies like American Water Works. That includes industrial tubing, filtration systems, efficient controllers and other plumbing tools. PHO has increased 27% over the past year and about 5% in 2017.

2. Guggenheim S&P Global Water Index (CGW)

CGW has a more global perspective than PHO but still has 40% of its investments in the US and about 15% in the UK. The assets are deployed to 43 companies and is more diversified in company size as well. It invests in American Water Works to get traditional water utility exposure. However, it also invests in Geberit which is a Swiss sanitation equipment firm that produces bathroom and plumbing equipment that is more efficient than older alternatives. CGW has risen about 16% in the past year and 5% in 2017.

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