Trend: Four water ETFs provide provide alternatives for long term investments in water.
Brian Powers at Seeking Alpha focuses on water as a long term investment, meaning decades. Excerpts from his in-depth analysis of water ETFs are below. Click on the link below to read the entire article.
When there is inadequate water present in an area, its people have only three options:
- create infrastructure to bring in new water
- find better technology and methods to treat, distribute and conserve the water they have
No matter which option is selected, in the US or abroad, there is no way to escape the high cost of water, our primary requirement for survival.
The research I have done has shown me that, in the US alone, the cost of all maintenance and repairs for freshwater and sanitation needs for the next twenty years is well over $1 trillion (despite what may actually be spent). On a global scale, the cost over the next twenty years is more than $5 trillion.
...in 2005, PowerShares launched the PowerShares Water Resources Portfolio ETF (PHO). This was the first concentrated fund investing in water related infrastructure, utilities and technology.
CGW, PIO and FIW are all fine ETFs. I actually like the global exposure in CGW and PIO despite the fact that I feel they are too concentrated at the top. Also, these three ETFs have existed for less than one year. CGW has assets of $315.65M, FIW of $10.49M and PIO of $241.09M.
PHO has assets of $2.14B which shows it may be the water ETF of choice among investors. I find that even though PHO is concentrated in US listed companies and ADR's, many of those companies have strong global sales. PHO holdings are also weighted far more equally than the other ETFs mentioned. Additionally I like the high concentration in engineering and construction companies. I already own PHO and I am satisfied with its performance so far. I see no reason to make a change.
Some of the stocks included in these ETFs have had a good run over the past year or so. Some have also recently corrected. The beauty of investing in a water ETF is twofold: you avoid single company risk and, through one instrument, you get coverage in utilities, infrastructure, technology and other water related industries.