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Should You Invest in the First Trust Water ETF (FIW)?

Designed to provide broad exposure to the Industrials - Water segment of the equity market, the First Trust Water ETF (FIW) is a passively managed exchange traded fund launched on 05/08/2007.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Industrials - Water is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $339.69 M, making it one of the average sized ETFs attempting to match the performance of the Industrials - Water segment of the equity market. FIW seeks to match the performance of the ISE Clean Edge Water Index before fees and expenses.

The ISE Clean Edge Water Index is a modified market capitalization-weighted index comprised of exchange-listed companies that derive a substantial portion of their revenues from the potable and wastewater industry.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.56%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.58%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector--about 55.70% of the portfolio. Utilities and Healthcare round out the top three.

Looking at individual holdings, Idexx Laboratories, Inc. (IDXX) accounts for about 4.88% of total assets, followed by American Water Works Company, Inc. (AWK) and Idex Corporation (IEX).

The top 10 holdings account for about 39.74% of total assets under management.

Performance and Risk

The ETF has added about 4.41% so far this year and was up about 17.85% in the last one year (as of 08/07/2018). In that past 52-week period, it has traded between $41.93 and $50.70.

The ETF has a beta of 1.09 and standard deviation of 15.42% for the trailing three-year period, making it a medium risk choice in the space. With about 37 holdings, it has more concentrated exposure than peers.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center .

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

FT-ISE WATER IX (FIW): ETF Research Reports

American Water Works (AWK): Free Stock Analysis Report

IDEX Corporation (IEX): Free Stock Analysis Report

IDEXX Laboratories, Inc. (IDXX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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