Water ETFs for a Global Crisis

Includes: CGW, FIW, PHO, PIO
by: Tom Lydon

Never mind the financial crisis; the world has a water crisis. Many countries – both emerging and developed – face shortages and lack of adequate access to clean, potable water. And therein likes the ETF opportunity.

The World Health Organization (WHO) reports that up to half of civilization has one of six diseases based solely upon the lack of clean, potable drinking water. About 5 million people die each year from the lack of such acess.

The problem is worst in emerging markets. Water Woes reports that China and India are among the fastest-growing nations, and have the most dismal water resources imaginable. Sewers are unusable, and water is so full of metals that they are not used for watering crops.

Other countries that are suffering a shortage of potable, fresh drinking water include Israel, and Egypt.

In the United States, all along the Colorado River, water is diverted for use in irrigation and urban water. Almost none of it makes it to the once-fertile delta.

According to the ETF Analyzer, there are four water ETFs that exist to play the international water shortage. As the crisis becomes more dire, companies are likely to sink more and more money into research and development to solve this pressing problem:

  • PowerShares Water Resources (NYSEArca: PHO): The largest water ETF, focus is on U.S. companies.
  • PowerShares Global Water (NYSEArca: PIO): Focuses on United States, Canada, Finland and Switzerland.
  • Claymore S&P Global Water (NYSEArca: CGW): Focuses on United States, United Kingdom, France, Japan, Switzerland.
  • First Trust ISE Water Index Fund (NYSEArca: FIW): Focuses on the United States.

Tisha Guerrero contributed to this category.