Water is one of the most widely consumed resources in the world. Everyone from government officials to ordinary people view water as a precious commodity. It’s a thriving industry with an immeasurable demand and it’s also a lucrative investment opportunity for traders looking to diversify their financial portfolio. That's why investors should know about water ETFs.
ETFs focused on the water sector allow you to easily invest in companies that collect, purify and distribute clean water. There is a handful of water ETFs listed on major stock exchanges that you can use to examine each exchange-traded fund at length to find the right fit for your financial goals.
Quick Look at the Best Water ETFs:
Water ETFs Biggest Gainers and Losers
Here’s a quick look at water ETFs on the market with the best profits and worst losses.
Premarket Water ETFs
Here’s a quick look at the premarket positions of water ETFs to help you predict their price movements during trading sessions.
Aftermarket Water ETFs
Here’s a quick look at the positions of water ETFs after major stock exchanges are closed for trading.
Why Invest in Water ETFs?
Here are the top 3 reasons for you to consider if you are looking to invest in water ETFs.
1. Water is a basic human right.
The United National General Assembly declared water a basic human right on July 28, 2020. This means that water is recognized as a necessity to maintain an adequate standard of living. In times of crisis, companies invested in the clean water industry can request special aides such as monetary funds or relief in export policies from international organizations such as the UN and Sanitation and Water for All.
Despite being consumed by millions of people every day, clean water has still remained affordable and accessible. Investing in water ETFs can ensure that it stays that way for years to come.
2. Water ETFs are a niche market.
There are less than 10 water ETFs listed on NASDAQ and NYSE with a combined total of $1.9 billion in assets under management (AUM). ETFs in this sector can reduce the risk profile of your investment portfolio. The limited number of investment choices in the water industry can help you do an in-depth analysis of the ETFs and their underlying companies.
First-world countries and developing economies are dependent on water companies to regularly maintain their infrastructure for water purification and water management. Even at 1% of your total investment in this market, water ETFs can add substantial diversity to your portfolio.
3. Water ETFs perform well in the long run.
The top 3 water ETFs with the highest AUM cost you less than $50 per share. They also have a low expense ratio (in the range of 0.5% – 0.7%). This means it will cost you a small fee (about $50 – $70) for investing $1,000 out of your pocket. Besides being affordable to buy, water ETFs have shown promising results for long-term holdings as well. As per the 3-year returns on the top 3 water ETFs listed on NASDAQ and NYSE, you can expect a 7% to 15% return on your investment.
3 Water ETFs by AUM
Water is an essential global commodity. That said, there are more than 30 water companies to invest in the U.S. alone. Purchasing a share in water mega-corporations such as American Water Works (AWK) and Waters Corporation (WAT) can cost you twice as much as it would to purchase a water ETF share. Water ETFs have a bad reputation for underperforming short-term gains due to governmental policies affecting the price of water company stocks.
Consider a few key factors such as expense ratios, historical performance data, liquidity and total AUM before you invest. Based on these criteria, Benzinga has hand-picked ETFs focused on the water industry.
1. Invesco Water Resources ETF (PHO)
Invesco Water Resources ETF has been on the market since December 6, 2005. It tracks the NASDAQ OMX U.S. Water Index and offers exposure to companies dealing with water utilities, infrastructure and equipment. It had an opening rate of $29.80 as of April 3, 2020 with a change rate of 1.94%. It has a low expense ratio of 0.60% with a total AUM of $859.2 million. It has high liquidity with an average daily trade volume of 86,200 shares.
2. Invesco S&P Global Water Index ETF (CGW)
Invesco S&P Global Water Index ETF has been on the market since May 14, 2007. It tracks the S&P Global Water Index and offers exposure to companies that provide materials for water infrastructure. It had an opening rate of $31.51 as of April 3, 2020 with a change rate of 1.99%. It has a low expense ratio of 0.62% with a total AUM of 540.1 million. It has high liquidity with an average daily trade volume of 58,000 shares.
3. First Trust ISE Water Index Fund (FIW)
First Trust ISE Water Index Fund has been on the market since May 11, 2007. It tracks the ISE Water Index and offers exposure to companies that generate revenue from potable and wastewater industries. It had an opening rate of $45.15 as of April 3, 2020 with a change rate of 2%. It has a low expense ratio of 0.55% with a total AUM of $422.3 million. It has comparatively lower liquidity with an average daily trade volume of 26,400 shares.
Best Online Brokers for Water ETFs
An online broker can help you find the best water ETFs in the market. You can trade ETFs at $0 commission rates on most online brokers. Benzinga recommends the following online brokers to get you started.
1. You Invest by J.P. Morgan
If you’re already a customer with Chase Bank, Chase You Invest by J.P. Morgan is a no-brainer. You can easily research, trade and manage your investments from your mobile device. You Invest provides online tools to search for investments, track companies and rollover your assets.
Only U.S. clients are able to open a You Invest account but it takes, on average, just a day to open and you’re able to apply fully online. Equipped with portfolio reports and pie charts, the mobile app is simple and user-friendly. The app is available for both iOS and Android devices.
With Chase You Invest you’ll have access to roughly 5,000 stock exchanges. There are plenty of research and educational tools provided on the app. Overall, we recommend the Chase You Invest platform for stock trading because it’s easy to open and fund an account. It’s also reliable thanks to its strong parent company, J.P. Morgan.
TradeStation is the preferred online broker for over 99,000 people around the globe. You can open a TS GO account with a $0 minimum deposit or a TS SELECT account with a $2,000 minimum deposit.
TradeStation offers diverse opportunities with more than 2000 exchange-traded funds to invest in. It has commission-free pricing plans for water ETFs and lets you track indices, sectors, commodities and currencies on the platform.
Magnifi is a marketplace that allows you, as the investor, to use common brokerage tools and AI to make the best decisions for your portfolio. Because you can pull up all the information you need on a given asset, you can easily invest in the assets that will give you the results you deserve and better match your strategy.
Search for the investment options that meet your needs, invest in specific categories or scan for assets in a price range that’s affordable for you.
Best for long-term investors and those who require a bit of client support, you can also learn more about investing from this platform, utilize the AI-powered investing assistant, enjoy commission-free investing, try the mobile app and take advantage of over 15,000 possible investment options. This makes Magnifi a good place to trade for both seasoned and novice traders.
Established in 1985, Firstrade has been a leading online broker for more than 3 decades. You can open an account on Firstrade with a $0 minimum deposit.
Firstrade offers more than 2,200 ETFs to trade with a $0 commission rate. There are more than 100 ETF providers listed with details and access to Morningstar coverage. You can backtrack the trade with a $0 redemption fee In case you sell an ETF prematurely. Firstrade is regulated by the SEC and FINRA.
5. TD Ameritrade
Established in 1975, TD Ameritrade has over 11 million accounts registered with a total of more than $1 trillion in assets. You can open an account on TD Ameritrade with a $0 minimum deposit.
ETFs can be traded commission-free on TD Ameritrade except for broker-assisted trades, which are priced at $25 per trade. Its powerful thinkorswim platform provides advanced trading tools such as comprehensive charting and customizable trading algorithms to help you monitor markets at the click of a button. TD Ameritrade is regulated by FINRA.
Clean Water for the World
It can be incredibly hard for people around the world to get a regular supply of drinking water. To combat this dire situation, many companies have set up facilities across the globe to provide clean water for domestic needs. Investing in water ETFs can enable companies to carry out operations to bring fresh water to thousands of homes and give you great returns in the long run.
What are water ETFs?
Water ETFs are shares in companies that collect, purify, and sell water.
Are water ETFs a good investment?
Water is a resource that people will always need, making water ETFs a great investment.
Which water ETFs are good?
Benzinga offers a list of the best water ETFs above.