Whet Your Whistle on What’s Next: Water ETFs; $PHO On Tap

etftrends logo imagesCourtesy of Tom Lydon and ETFTrends


The long term outlook for potable water remains uncertain, but the prospects for water becoming a valued commodity is not a matter of if, just a matter of when as the global population rises.

“The increasing need for fresh water has emerged in recent years as a potentially lucrative long-term investment theme. The investment thesis is based on the fact that demand for clean water increases along with the global population. PowerShares Water Resurces (NYSEArca: PHO) aims to provide exposure to this theme by tracking an index of firms that have business lines focused on water treatment services and infrastructure,” John Gabriel wrote for Morningstar. [Climate Change, Rising populations Put Water ETFs in Focus]

Every company involved with water stands to benefit if water ever becomes a “blue gold,” reports Brian Shaw for The Motley Fool. According to a study by the World Water Assessment Programmer Study, 70% of fresh water is used for irrigation, while 22% is used in industry and 8% is used in domestic households. [The Case for Water ETFs]

Companies that are represented in PHO include industrial firms that have operations in water treatment equipment and/or pipe and pump manufacturing. Another big chunk of the fund is composed of water utilities, which make up about 24% of assets, reports Gabriel. However, many of the water-focused firms that are currently operating earn regulated returns and many of the diversified industrial firms generate significant business from industries outside the investable water complex.

Interestingly, water has been 90% correlated to the industrial sector. FOR THE FULL ARTICLE, please click here