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

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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.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

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 6, placing it in top 38%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $350.45 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

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector--about 56.20% of the portfolio. Utilities and Healthcare round out the top three.

Looking at individual holdings, Idexx Laboratories, Inc. (IDXX) accounts for about 4.79% of total assets, followed by Ecolab Inc. (ECL) and Idex Corporation (IEX).

The top 10 holdings account for about 39.84% of total assets under management.

Performance and Risk

The ETF has added roughly 5.35% and was up about 21.62% so far this year and in the past one year (as of 08/30/2018), respectively. FIW has traded between $42.79 and $51.25 during this last 52-week period.

The ETF has a beta of 1.09 and standard deviation of 15.11% 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

Ecolab Inc. (ECL): Free Stock Analysis Report

IDEX Corporation (IEX): Free Stock Analysis Report

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

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Zacks Investment Research

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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