One of the most abundant and precious commodities on earth is
Despite its ubiquity in the United States, many third world
countries and dry climates continually struggle to protect this
In the summer months, when drought conditions worsen, water
infrastructure becomes a top priority that must be kept
Fortunately, many publicly traded companies are involved in
the service, distribution, engineering, and general utility
infrastructure of the water industry. These stocks are
easily accessible in several diversified exchange-traded funds
that offer investors both domestic and global exposure. The
PowerShares Water Resources Portfolio (NYSE:
) is the largest ETF in this space, with more than $1 billion in
assets under management. PHO invests in 29 individual water
companies across a variety of industry sub-specialties.
Despite its dominant size, PHO has struggled to make
significant headway in 2014.
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So far this year, this ETF has only gained 1.66 percent and
struggled to maintain an upward bias. However, several
competing funds with more diversified portfolios have seen much
The Guggenheim S&P Global Water ETF (NYSE:
) and PowerShares Global Water Portfolio (NYSE:
) have notched gains of 9.22 and 7.73 percent, respectively this
CGW invests in 50 companies selected by the S&P Global
Water Index according to industry classification, while PIO own
37 stocks in the NASDAQ OMX Global Water Index.
The United States is the top country weighting in both global
ETF portfolios. However, overseas exposure to companies in
France, Switzerland and the United Kingdom has been a key
contributor to this recent outperformance.
In addition, both of these ETFs carry more direct exposure to
the utility sector, which has been the top performing area of the
market this year.
The biggest risk to this upward momentum is a slowdown in
global growth that could cap expansion of water assets in hard to
reach areas of the world.
However, these water ETFs may ultimately continue to
strengthen based on the fundamental demand story and a strong
equity market tailwind pushing prices higher.
For now, the rally is flowing in earnest.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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