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What is a water ETF?


Milan
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Hi Milan,

Water is best known as a source of life; however, you can use it to diversify your portfolio. Water is a commodity ETF, just the same way you have gold and energy ETFs. Water is becoming scarce recently, and this scarcity is what is making it a good investment option.
Water covers most parts of the earth's surface; however, a good fraction of it is usually salty water. However, this water is unhealthy for human use and various social activities such as crop irrigation and industrial use. The growth of industries and increased agricultural activities have a significant impact on water shortages across the world.
Various indexes aim at tracking multiple investment opportunities that arise due to water shortages. One such index is the Dow Jones US Water Index. Typically, it is a barometer that consists of many companies globally linked with the water business. Another high index is the ISE-B&S water index. It constitutes water distribution, filtration, and other firms that focus on dealing with solutions that are linked to water.
The S&P Global Water Index checks the utilities, materials, and infrastructure related to water while Bloomberg and the MSCI water indexes look at the water sectors internationally. Finding information about these indexes can, however, be challenging.
There are many water ETFs in the stock market. Water ETFs may focus on particular countries, while others trade may concentrate on all exchanges. A good example is the PowerShares portfolio, which focuses specifically on water companies based in America.
There is a high demand for water all over the world because water is essential for human survival. Therefore if you invest in water ETFs, you are best assured to make significant gains. You may focus on water pieces of equipment, the distribution of water, or any other water-related products that may bring you income. However, like any additional exchange-traded funds, water ETFs come with several risks that you need to evaluate before you invest.

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