2 exchange-traded funds for investment in water resources

Water is the source of life on our planet. The humanitarian and environmental consequences of water shortages (or floods) are regularly reported in the media, and as recently as March 22, we celebrated World Water Day . According to National Geographic :

“Humanity is faced with the growing problem of uneven distribution of water resources.”

Research by Dr. Rajibur Reza from Griffith University Business School highlights :

“20% of the world’s population does not have stable access to improved sources of drinking water, and about 2.6 billion people live in unsanitary conditions … By 2050, more than 4 billion people (almost half of the total population) will be concentrated in countries experiencing chronic shortages water”.

In other words, the uneven distribution of water resources has made clean drinking water a valuable commodity. Against this background, both the economic and the “business” side of the issue acquired great importance.

For example, Wall Street launches related exchange-traded funds (ETFs). In a recent article, we looked at the Invesco Water Resources ETF (NASDAQ: PHO ), and today we will dig deeper into the matter by presenting two more ETFs that might interest readers.

1. First Trust Water ETF
  • Cost : $ 78.93
  • Annual trading range : $ 44.00-78.99;
  • Dividend Yield : 0.50%;
  • Investment costs : 0.54%.

The First Trust Water ETF (NYSE: FIW ) allows you to invest in businesses that generate a significant portion of the revenue in the water and wastewater sectors. The fund debuted on May 20, but has already managed to increase net assets to $ 821 million.

The FIW portfolio is assembled from 36 components of the ISE Clean Edge Water Index. About 40% of the funds are invested in the top ten assets. By industry, the leaders are industrial (56.82%) and utilities (21.58%), as well as companies in the healthcare sector (11.56%).

Topping FIW’s portfolio of investments is Pentair (NYSE: PNR ), which specializes in water quality control systems and filtration solutions; IDEXX Laboratories (NASDAQ: IDXX ), which offers products and services for water quality testing, among others; and Roper Technologies (NYSE: ROP ), a provider of instrumentation and analytical solutions .

Since the beginning of 2021, the fund has added 8% and updated its all-time high on April 1. The sliding P / E and P / B ratios of 35.52 and 3.92, respectively, indicate overbought.

Many FIW components will publish quarterly reports in the coming weeks and will therefore be subject to increased volatility and profit-taking. A potential drawdown to $ 75 (or less) will increase the margin of safety for long-term positions.

2. Invesco S&P Global Water Index ETF
  • Cost : $ 49.72
  • Annual trading range : $ 30.98-49.67;
  • Dividend Yield : 1.33%
  • Investment costs : 0.57%.

The Invesco S&P Global Water Index ETF (NYSE: CGW ) provides investors with access to a range of international businesses in industries such as water supply, infrastructure, equipment, tools and materials. The fund was launched in May 2007 and has a portfolio of 50 assets valued at $ 49 million.

The base of the CGW is the S&P Global Water Index. Fixed assets were invested in industrial companies (47.86%), utilities (41.28%) and information technology (6.03%).

About 38% of the capital is invested in the 10 largest assets. The lion’s share of companies are from the United States. The fund also works with enterprises in the UK, France, Switzerland and Canada. The list of investments tops the list of pumping equipment supplier Xylem (NYSE: XYL ); Pentair (NYSE: PNR ); and the Swiss sanitary ware manufacturer Geberit (OTC: GBERY ).

Since the beginning of the year, the ETF has gained almost 6% and updated its all-time high in trading on April 1. The sliding ratios of P / E and P / B are 30.37 and 2.90, respectively. Potential long-term investors should wait for a correction to $ 45.

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