... that uses silver iodide crystals with the hope to grow clouds and prod the water vapor to condense into rain.
While the effects of such exotic techniques are truly questionable, the future outlook leaves little room for doubt that no significant improvement is in sight.
- Retiring baby boomers and young workers continue to flock to the West, where it’s warm with a for now stable economy
- The seven states that depend on the Colorado River include five of the 12 fastest-growing states in the nation
- Montana filed a law suit accusing Wyoming of siphoning off more water than it’s share
- Utah vowed to fight the Nevada pipeline which will grab water their farmers need
- Los Angeles officials have asked residents to use 20 gallons or less per day
- Las Vegas has budgeted $100 million to pay $2 for each square foot of lawn replaced by drought-resistant ground cover.
Don’t Water ETFs sound like a cold beer to parched investor’s souls?
Water ETFs were a good idea even before global warming, with global warming they’ve become a great idea.
The ETF universe offers us four water related ETFs: 1) First Trust ISE Water Index Fund (Ticker: FIW), 2) PowerShares Water Resource Portfolio (Ticker: PHO), 3) Claymore S&P Global Water Index (Ticker: CGW), 4) PowerShares Global Water Portfolio (Ticker: PIO).
While the performance numbers of all four ETFs vary, it is interesting to note that the general directional movements are quite in sink, similar to comparing the charts of the market cap weighted S&P 500 (Ticker: SPY) with an equal weighted S&P 500 (Ticker: RSP).
FIW and PHO consist almost exclusively of domestically active companies; CGW and PIO contain US and internationally active companies. Considering this narrow sector of the domestic and global economy the overlap of individual holdings between those four ETFs is surprisingly small.
When analyzing the individual holdings of each ETF you will find that only few companies derive there revenues solely from water related business.
ITT Corp (Ticker: ITT), a holding of CGW and PHO for examples generates revenue through sales of defense electronics, night vision equipment and electronic warfare technologies in addition to their fluid (waste water & water treatment) technology segment.
Nalco Holdings (Ticker: NLC), held by FIW, CGW, PHO and PIO provides enhancement programs for natural gas, petroleum and petrochemical companies in addition to water applications.
Water ETF Snapshot:
|
Name / Ticker
|
Expense
Ratio
|
Inception
Date
|
Trading
Volume
|
Weighting
Methodology
|
|
First Trust - FIW
|
0.75%
|
05-08-07
|
7,000
|
Market Cap
|
|
PowerShares - PHO
|
0.60%
|
12-06-05
|
511,200
|
Modified Equal
|
|
Claymore – CGW
|
0.65%
|
05-14-07
|
88,600
|
Market Cap
|
|
PowerShares - PIO
|
0.75%
|
06-13-07
|
126,400
|
Modified Equal
|
Trading volume based on 3 month average. ETFs are sorted by best performance as of 11-26-07
Even though there is currently $2.5 billion in water projects underway in an effort to expand water supplies it is likely that exploding demand will outpace dwindling water supplies. “This is a situation that will eventually cause water wars”, said a scientist at the National Center for Atmospheric Research.
While none of the above ETFs is a 100% pure play, it is still the best way to capitalize from a shift in climate and the resulting water shortage.
Simon Maierhofer is the Co-Founder of ETFguide, LLC and manages three Ready-To-Go Portfolios. The above Water ETFs are on his watch list.
To receive an alert on which ETF to buy at what time, sign up for a free trial to the Ready-To-Go Portfolios at http://www.etfguide.com/choose_plan.htm. |
