First Trust Water ETF (ARCA:FIW), Quote.Headers.trade-ideas

First Trust Water ETF

First Trust ISE Water Index Fund

Industrials

Utilities

Healthcare

Technology

Basic Materials

Consumer Defensive

The fund will normally invest at least 90% of its net assets (including investment borrowings) in the common stocks and depositary receipts that comprise the index. The index is designed to track the performance of small, mid and large capitalization companies that derive a substantial portion of their revenues from the potable water and wastewater industry, according to Clean Edge.

American Water Works Co. Inc.

Veralto Corp

Ecolab, Inc.

Essential Utilities Inc - Common

Xylem Com

Agilent Technologies Inc

Waters

Mueller Industries Inc

Tetra  Tech  Inc  New 

Roper Technologies Inc.

Large Cap

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ETFs

PowerShares Exchange Traded Fund Water Resource Portfolio

VLTO

Launched on 05/08/2007, the First Trust Water ETF (ARCA:FIW) is a passively managed exchange traded fund designed to provide a broad exposure to the Industrials - Water segment of the equity market.

Should You Invest in the First Trust Water ETF?

Asset Sales

If you&#39;re interested in broad exposure to the Industrials - Water segment of the equity market, look no further than the Invesco S&amp;P Global Water Index ETF (ARCA:CGW), a passively managed exchange traded fund launched on 05/14/2007.

Should You Invest in the Invesco S&amp;P Global Water Index ETF?

Tech

The Invesco Water Resources ETF (NASDAQ: PHO) was launched on 12/06/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Industrials ETFs category of the market.

What Are Smart Beta ETFs?

Is Invesco Water Resources ETF a Strong ETF Right Now?

Launched on 05/08/2007, the First Trust Water ETF (ARCA:FIW) is a passively managed exchange traded fund designed to provide a broad exposure to the Industrials - Water segment of the equity market.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Water is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.
<h2>Index Details</h2>
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.76 billion, making it one of the larger 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.
<h2>Costs</h2>
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.53%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.61%.
<h2>Sector Exposure and Top Holdings</h2>
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund&#39;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 53.60% of the portfolio. Utilities and Healthcare round out the top three.
Looking at individual holdings, Veralto Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vlto#NYSE">VLTO</a>) accounts for about 4.71% of total assets, followed by American Water Works Company, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/awk#NYSE">AWK</a>) and Ecolab Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/ecl#NYSE">ECL</a>).
The top 10 holdings account for about 39.51% of total assets under management.
<h2>Performance and Risk</h2>
Year-to-date, the First Trust Water ETF return is roughly 9.14% so far, and is up about 20.28% over the last 12 months (as of 09/12/2024). FIW has traded between $77.30 and $107.61 in this past 52-week period.
The ETF has a beta of 1.02 and standard deviation of 19.40% 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.
<h2>Alternatives</h2>
First Trust Water ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FIW is an excellent option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Invesco S&amp;P Global Water Index ETF (ARCA:CGW) tracks S&amp;P GLOBAL WATER INDEX and the Invesco Water Resources ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pho#NASDAQ">PHO</a>) tracks NASDAQ OMX US Water Index. Invesco S&amp;P Global Water Index ETF has $981.69 million in assets, Invesco Water Resources ETF has $2.17 billion. CGW has an expense ratio of 0.56% and PHO charges 0.60%.
<a href="https://www.zacks.com/stock/news/2335017/should-you-invest-in-the-first-trust-water-etf-fiw?cid=CS-BENZ-FT-sector_etf-2335017">To read this article on Zacks.com click here.</a>

If you&#39;re interested in broad exposure to the Industrials - Water segment of the equity market, look no further than the Invesco S&amp;P Global Water Index ETF (ARCA:CGW), a passively managed exchange traded fund launched on 05/14/2007.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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 13, placing it in bottom 19%.
<h2>Index Details</h2>
The fund is sponsored by Invesco. It has amassed assets over $971.84 million, making it one of the average sized ETFs attempting to match the performance of the Industrials - Water segment of the equity market. CGW seeks to match the performance of the S&amp;P GLOBAL WATER INDEX before fees and expenses.
The S&amp;P Global Water Index comprises of developed market securities including water utilities, infrastructure, equipment, instruments and materials.
<h2>Costs</h2>
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
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 1.42%.
<h2>Sector Exposure and Top Holdings</h2>
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, American Water Works Co Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/awk#NYSE">AWK</a>) accounts for about 8.63% of total assets, followed by Xylem Inc/ny (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xyl#NYSE">XYL</a>) and Veralto Corp (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vlto#NYSE">VLTO</a>).
The top 10 holdings account for about 52.72% of total assets under management.
<h2>Performance and Risk</h2>
The ETF has added roughly 8.91% and it&#39;s up approximately 19.45% so far this year and in the past one year (as of 09/09/2024), respectively. CGW has traded between $44.46 and $59.88 during this last 52-week period.
The ETF has a beta of 0.99 and standard deviation of 18.38% for the trailing three-year period, making it a low risk choice in the space. With about 74 holdings, it effectively diversifies company-specific risk.
<h2>Alternatives</h2>
Invesco S&amp;P Global Water Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, CGW is a sufficient option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
First Trust Water ETF (ARCA:FIW) tracks ISE Clean Edge Water Index and the Invesco Water Resources ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pho#NASDAQ">PHO</a>) tracks NASDAQ OMX US Water Index. First Trust Water ETF has $1.75 billion in assets, Invesco Water Resources ETF has $2.15 billion. FIW has an expense ratio of 0.53% and PHO charges 0.60%.
<a href="https://www.zacks.com/stock/news/2333158/should-you-invest-in-the-invesco-s-p-global-water-index-etf-cgw?cid=CS-BENZ-FT-sector_etf-2333158">To read this article on Zacks.com click here.</a>

Should You Invest in the Invesco S&P Global Water Index ETF?

Launched on 05/14/2007, the Invesco S&amp;P Global Water Index ETF (ARCA:CGW) is a passively managed exchange traded fund designed to provide a broad exposure to the Industrials - Water segment of the equity market.
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 are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Water is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.
Index Details
The fund is sponsored by Invesco. It has amassed assets over $955.71 million, making it one of the average sized ETFs attempting to match the performance of the Industrials - Water segment of the equity market. CGW seeks to match the performance of the S&amp;P GLOBAL WATER INDEX before fees and expenses.
The S&amp;P Global Water Index comprises of developed market securities including water utilities, infrastructure, equipment, instruments and materials.
Costs
Investors should also pay attention to an ETF&#39;s expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
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 1.47%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Xylem Inc/Ny (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xyl#NYSE">XYL</a>) accounts for about 8.56% of total assets, followed by American Water Works Co Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/awk#NYSE">AWK</a>) and Veralto Corp (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vlto#NYSE">VLTO</a>).
The top 10 holdings account for about 54.53% of total assets under management.
Performance and Risk
The ETF has added roughly 5.49% and is up about 12.92% so far this year and in the past one year (as of 07/09/2024), respectively. CGW has traded between $44.46 and $59.71 during this last 52-week period.
The ETF has a beta of 0.98 and standard deviation of 18.19% for the trailing three-year period, making it a low risk choice in the space. With about 67 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&amp;P Global Water Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, CGW is a sufficient option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
First Trust Water ETF (ARCA:FIW) tracks ISE Clean Edge Water Index and the Invesco Water Resources ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/pho#NASDAQ">PHO</a>) tracks NASDAQ OMX US Water Index. First Trust Water ETF has $1.66 billion in assets, Invesco Water Resources ETF has $2.08 billion. FIW has an expense ratio of 0.53% and PHO charges 0.60%.
<a href="https://www.zacks.com/stock/news/2298261/should-you-invest-in-the-invesco-s-p-global-water-index-etf-cgw?cid=CS-BENZ-FT-sector_etf-2298261">To read this article on Zacks.com click here.</a>

Roper Technologies Inc&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ROP#NASDAQ">ROP</a>) reported&nbsp;fiscal first-quarter 2024 revenue growth of 14% year-on-year to $1.68 billion, beating the analyst consensus&nbsp;<a target="_blank" href="https://www.benzinga.com/pressreleases/24/04/g38455590/roper-technologies-announces-first-quarter-financial-results" rel="noreferrer noopener">estimate of $1.65 billion</a>. Adjusted EPS of $4.41&nbsp;beat the analyst&nbsp;<a target="_blank" href="https://www.benzinga.com/calendars/earnings" rel="noreferrer noopener">consensus estimate of $4.34</a>.
Gross profit increased to $1.18 billion from $1.02 billion a year ago. Operating income increased to $483.9 million from $360.1 million the prior quarter.
Adjusted EBITDA rose 16%&nbsp;year over year&nbsp;to $676 million, and margin expanded by 60 basis points to 40.2%.
Operating cash flow for the quarter totaled $531 million, up by 14% Y/Y.
The company held $198.4 million in cash and equivalents as of March 31, 2024.
Neil Hunn, Roper Technologies&#8217; President and&nbsp;CEO&nbsp;said, &#8220;We completed our acquisition of Procare during the first quarter and remain excited about the value creation opportunity this represents for Roper.&#8221; &#8220;We are increasing our&nbsp;full year&nbsp;2024 outlook, supported by our strong first quarter results, continued customer demand for our businesses&#8217; mission critical solutions, and the ongoing expansion of our recurring revenue base.
Outlook:&nbsp;<a target="_blank" href="https://investors.ropertech.com/investors/webcasts-presentations/default.aspx" rel="noreferrer noopener">Roper expects FY24</a>&nbsp;revenue growth of ~12% (prior 11% &#8211; 12%) vs. consensus of $6.89 billion and adjusted EPS of $18.05 &#8211; $18.25 (<a target="_blank" href="https://www.benzinga.com/news/earnings/24/01/36869450/why-software-technology-company-roper-shares-are-down-today" rel="noreferrer noopener">prior $17.85 &#8211; $18.15</a>) vs. $18.12 estimate.
&nbsp;Roper expects adjusted EPS of $4.42 &#8211; $4.46 for its second quarter, compared to the&nbsp;<a target="_blank" href="https://www.benzinga.com/calendars/guidance" rel="noreferrer noopener">Street view of $4.49</a>.
Roper Technologies stock gained over 25% in the last 12 months. Investors can gain exposure to the stock via&nbsp;Invesco Water Resources ETF&nbsp;(NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/PHO#NASDAQ">PHO</a>) and&nbsp;First Trust Water ETF&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FIW#NYSE">FIW</a>).
<h2 class="wp-block-heading">Is Roper Tech A Good Stock To Buy?</h2>
Wall Street analysts view Roper Techs (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ROP#NASDAQ">ROP</a>) on the whole as a Outperform, given the history of coverage over the past three months. Christopher Glynn from Oppenheimer in Roper Techs is the most optimistic, expecting a 12.07% rise in the stock in the coming year.
But looking at how the market as a whole thinks of the stock, you can reference historical price action for views on whether investors feel strongly about the stock one way or another. In the past 3 months, Roper Techs fell 2.79%, which indicates that opinion soured on the business and how attractive it is to own based on either its stock price, or underlying fundamentals, like revenue, which rose 14.35% over the past year.
A complete overview of how Wall Street views individual stocks is available <a href='https://www.benzinga.com/analyst-stock-ratings'>here</a>, while real time updates on the latest analyst actions will be delivered via <a href='https://pro.benzinga.com'>Benzinga PRO</a>. Try it for free.
Price Action: ROP shares closed higher by 0.45% at $540.41 at last check on Thursday.
Image: Shutterstock/ whiteMocca

Earnings

Guidance

Software Provider Roper Tech Boosts Annual Outlook Following Q1 Performance: The Details

The promise was for a $1-trillion infrastructure plan from Trump&#39;s campaign days but the actual plan launched lately is a $200-billion federal infrastructure plan, which comprises below-mentioned areas:
<ol>
<li>
		$100 billion in matching grant would go to states and cities on new, <a href="https://www.vox.com/policy-and-politics/2018/2/12/17003840/trumps-infrastructure-plan">less-generous terms</a>.</li>
<li>
		$50 billion rural block grant program that will be available to states based on the length of rural roads and the level of rural inhabitants.</li>
<li>
		Around $20 billion for &quot;projects of national significance&quot; meaning &quot;projects that can lift the American spirit, that are the next-century-type of infrastructure as opposed to just rebuilding what we have currently.&quot;</li>
<li>
		Additional &quot;$20 billion in fund <a href="https://www.vox.com/policy-and-politics/2018/2/12/17003840/trumps-infrastructure-plan">would go to federal loan programs</a> that underwrite private financing of profitable infrastructure projects.&quot;</li>
<li>
		Plus, there&#39;s a $10-billion capital financing program that would finance the construction of federal office buildings and similar infrastructure for actual government use.</li>
</ol>
Per <a href="https://www.vox.com/policy-and-politics/2018/2/12/17003840/trumps-infrastructure-plan">an article published</a> on VOX.com, &quot;federally funded highways are financed on the basis of an 80-20 federal-state split.&quot; Trump&#39;s proposal is to reverse the 80-20 formula and call for states and cities to dole out at least $4 for every $1 in federal money they get. Some experts believe that the current formula results in &quot;over-investment in new highway projects with little transportation value.&quot;&nbsp;
The overall plan is supposed to lure private companies to come up of the groundwork and reconstruct America to the extent of $1.5 trillion <a href="http://fortune.com/2018/02/12/trump-infrastructure-plan-speech-white-house-budget/">over the coming 10 years</a>. However, <a href="http://fortune.com/2018/02/12/trump-infrastructure-plan-speech-white-house-budget/">sources believe that</a> private investors are less likely to be drawn to this project.
Investors should also note that the Trump administration did not roll out a separate infrastructure proposal, rather it came with a budget package &quot;that would also <a href="http://fortune.com/2018/02/12/trump-infrastructure-plan-speech-white-house-budget/">cut $48 billion in federal funding</a> for other programs and services.&quot;
The vox.com article indicated that Republican administrations are known for proposing big initiatives that are intended to be funded by increasing budget deficits. George W. Bush&#39;s 2001 tax cuts, 2003 tax cuts and Medicare expansion as well as Trump&#39;s 2017 tax cuts and his big increase in military spending have been held as examples for this Republican tendency by vox.com.
Any Bright Side? 
There is an initiative that would save $350 billion for drinking water pipes to guarantee that there is no another Flint, Michigan-style water crisis in the coming few years. This single initiative grossed more federal funds than the entire infrastructure plan. So, water ETFs like PowerShares Water Resources PHO and First Trust ISE Water Index Fund FIW should benefit from this plan.
As long as infrastructure ETFs are concerned, there are less likely to get a boost as financing would be a big issue. Still, investors can keep a tab on funds like Global X U.S. Infrastructure Development ETF PAVE, ProShares DJ Brookfield Global Infrastructure ETF TOLZ and SPDRS&amp;P Global Infrastructure ETF GII.
Transportation ETFs like iShares Transportation Average ETF IYT and SPDR S&amp;P Transportation ETF XTN should also be closely watched.
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SPDR FTSE/Macquarie Global Infrastructure 100 ETF

iShares Dow Jones Transportation Average Index Fund

PAVE

TOLZ

Will Infrastructure ETFs Get A Boost From Trump's Plan?

Stephen Parker, head of JPMorgan's Thematic Equity Solutions, <A href="http://video.cnbc.com/gallery/?video=3000553664">told CNBC on Friday</a> that investors shouldn't be chasing yield in non-traditional asset classes.
Parker said investors have been "pilling in" to asset classes, which are perceived to be "safe havens." These include minimum volatility ETFs that offer exposure to utilities, consumer staples and other sectors that offer a "more attractive yield."
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/16/09/8475280/a-surprise-among-utilities-etfs">A Surprise Among Utilities ETFs</a></bzrelatedlink>
However, sectors such as utilities are no longer trading at a discount; rather, they are trading at a premium to the market.
"When you think about safety, safety is a reflection not just of the fundamentals but also of the price you are paying," he expanded. "We are telling clients to be cautious about chasing yields at this point."
Despite his cautious tone, he added that one of the "really positive" themes of the market year-to-date is that many of these safe sectors have outperformed the broader market. However, investors are indeed becoming "nervous" about the current price to buy these supposed safe haven investments.
Parker continued that in order for stocks to continue moving forward there needs to be better earnings and economic growth along with a higher inflation rate. His personal expectation is for growth to be "modest" and overall "positive."
<a href="https://pro.benzinga.com/?utm_source=Benzinga&amp;utm_medium=Benzinga%20Top%20of%20Article&amp;am%22%3">Full ratings data available on Benzinga Pro.</a>
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Analyst Color

CNBC

Media

PowerShares S&P 500 Low Volatility Portfolio

SPLV

SRET

JPMorgan Warns Investors To Be 'Cautious About Chasing Yield'

After spending a good part of this year as the best performing sector, utilities have been sapped by concerns that the Federal Reserve is finally nearing its first interest rate hike of 2016 and that defensive stocks are richly valued.
Many good things come to an end, and while it is still in the speculative stages, there are signs investors are tiring of the low beta love affair. That could also mean equity markets are pricing in an interest rate hike the Treasury market is not yet acknowledging.
In fact, the Utilities SPDR (ETF) (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>) is no longer this year&#39;s best performing utilities exchange-traded fund. The same can be said of XLU&#39;s nearest rivals. This year&#39;s top utilities ETF is the First Trust ISE Water Index Fund (ETF) (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>), one of several dedicated water ETFs on the market today.
<h3>Making A Splash</h3>
Escalating water needs in the United States and throughout the world could spell opportunities in this sub-sector for investors.
&quot;Meanwhile, the cost of water continues to rise, as budget-strapped municipalities pass the costs for upgrades and repairs on to consumers,&quot; according to S&amp;P Capital IQ.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/09/8457201/hilliard-lyons-sees-aqua-americas-fair-value-at-27">Hilliard Lyons Sees Aqua America's Fair Value At $27</a></bzrelatedlink>
&quot;However, water reuse is growing in popularity for irrigation and other uses that don&#39;t really require the same costly treatment as for potable water. More municipalities are seeking reuse and desalination projects, as technology continues to become more cost efficient. Thus, we think long-term prospects are very favorable for flow control and filtration related water treatment companies.&quot;
<h3>Diving Into FIW</h3>
FIW tracks the ISE Water Index, which &ldquo;begins by establishing the total population of stocks in the potable and wastewater industry and eliminates stocks which do not meet the Index&rsquo;s baseline eligibility requirements,&rdquo; according to Illinois-based <a href="http://www.ftportfolios.com/Retail/Etf/EtfSummary.aspx?Ticker=FIW">First Trust</a>.
Year-to-date, FIW is up 21.9 percent, an advantage of 700 basis points over XLU. FIW is home to 35 stocks, none of which exceeds an allocation of 4.8 percent.
&ldquo;Water/wastewater infrastructure needs are estimated at $126 billion by 2020, but funding is projected at only $42 billion, leaving a gap of $84 billion,&quot; according to S&amp;P Capital IQ. &quot;There are estimated to be between 700,000 and 800,000 miles of public sewer mains in the U.S., and over one million miles of drinking water systems, with many of these pipes well over 100 years old, meaning they are either past or nearing the end of their useful life,&rdquo; added S&amp;P Capital IQ.
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Long Ideas

Commodities

A Surprise Among Utilities ETFs

Summer is the season for cold drinks. It&#39;s also the time of year when droughts worsen, putting the spotlight on water infrastructure and investment opportunities.

	Speaking of those themes, the Summit Water Infrastructure Multifactor Exchange Traded Fund (NYSE: WTRX) commenced trading Wednesday. The newest addition the water ETF segment follows the Summit Zacks Global Water Index.

	WTRX&#39;s underlying index can hold &ldquo;30 to 50 companies engaged in the global water industry. Specifically, the underlying index will utilize a rules-based indexing methodology to incorporate fundamental factors that have been strong historical indicators of the long-term performance of water equities,&rdquo; according to <a href="http://www.etftrends.com/2016/08/a-new-smart-beta-water-etf/">ETF Trends</a>.

	&ldquo;As opposed to passive water indices that are constructed through various measures of market capitalization, equities are selected for inclusion in the Index by a proprietary formula of relevant company fundamentals including measures of price/earnings, intrinsic value, and return on capital,&rdquo; Matt Dickerson, CEO of Summit Water Capital Advisors, said in a press release. &ldquo;Through this methodology, the Index targets a more balanced and representative exposure to the global water industry that encompasses several world markets and broader capitalization levels, as opposed to a less-diversified basket of the largest, most expensive stocks.&rdquo;

	WTRX features some screening criteria to limit exposure micro-cap water names while potentially enhancing the ETF&#39;s liquidity. For example, the new ETF&#39;s holdings must have a minimum market value of at least $200 million prior to inclusion. Additionally, WTRX holdings must have a three-month average daily dollar volume of at least $400,000.

	WTRX and its underlying index are departures from existing water ETFs on the market today as the new ETF represents the first smart beta approach in the space.

	&ldquo;As opposed to the passive water indices currently published that are constructed through various measures of market capitalization, equities are selected for inclusion in the Index by a proprietary formula of relevant company fundamentals including measures of price/earnings, intrinsic value, and return on capital.&nbsp; Through June 30, 2016, year-to-date gross total returns for the Index were 10.78% versus 3.82% for the NASDAQ OMX Global Water Index,&rdquo; according to California-based <a href="http://summitwatercapital.com/water-strategies/water-equities/">Summit</a>.

	WTRX charges 0.8 percent per year, or $80 on a $10,000 investment.

	Established water ETFs include the First Trust ISE Water ETF (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>) and the PowerShares Water Resources Portfolio (NYSE: <a class="ticker" href="/stock/pho#NYSE">PHO</a>).

Specialty ETFs

New ETFs

Cool Off With A New Water ETF

An interesting investment opportunity has recently emerged in an otherwise overlooked sector: water. California is in the midst of a four-year drought that has taken its supply of water down to one year <a href="http://www.theguardian.com/us-news/2015/mar/16/california-water-drought-nasa-warning">according to NASA</a>.

	With a population of 39 million people and holding the title of the largest farming state in the country, California is in a state of emergency. Consider, for instance, that the state produces more food from farming than Iowa, Nebraska and Minnesota combined.
<h3>
	Continental Implications</h3>

	This is not just a California problem; due to the size of the state&#39;s economy, the ramifications will be felt around the country. Everything from higher almond prices to the potential loss of jobs is possible. That being said, there is almost always an investment angle when a crisis occurs, and this time is no different.

	<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/pressreleases/15/04/p5381635/california-droughts-first-ever-statewide-water-restrictions-fresh-water">California Drought&#39;s First Ever Statewide Water Restrictions</a></bzrelatedlink>

	An investor could consider purchasing individual stocks that manufacture and produce water conservation technologies. However, there is a broader approach to the water sector that includes several related ETFs.

	Highlighted below are three water ETFs that have been and will continue to be affected by the drought in California.
<h3>
	PowerShares Water Resources Portfolio ETF</h3>

	The Powershares Water Resource Portfolio (NYSE: <a class="ticker" href="/stock/pho#NYSE">PHO</a>) is made up of 28 companies across nine sectors that create products designed to conserve and purify water for homes, businesses and industries. The top weighted sub-sectors include machinery at 48 percent and water utilities at 18 percent.

	The top individual holding include:
<ul>
<li>
		Waters Corporation (NYSE: <a class="ticker" href="/stock/wat#NYSE">WAT</a>) at 8.4 percent</li>
<li>
		Roper Industries, Inc. (NYSE: <a class="ticker" href="/stock/rop#NYSE">ROP</a>) making up 8.3 percent</li>
<li>
		Pall Corporation (NYSE: <a class="ticker" href="/stock/pll#NYSE">PLL</a>) coming in at 7.8 percent</li>
</ul>

	PHO is down 7 percent over the last 12 months, up 3 percent over the last six months and down 3 percent year-to-date. The water ETF has an expense ratio of 0.61 percent.
<h3>
	PowerShares Global Water Portfolio ETF</h3>

	The PowerShares Global Water Portfolio (ETF) (NYSE: <a class="ticker" href="/stock/pio#NYSE">PIO</a>) provides investors exposure to 35 companies across five sectors and 10 countries. The United States at 40 percent and the United Kingdom at 21 percent are the top weighted countries. Industrials at 52 percent and utilities at 39 percent make up the majority of the portfolio.

	The top holdings include:
<ul>
<li>
		Geberit AG (OTC: <a class="ticker" href="/stock/gbery#OTC">GBERY</a>) with an 8.5 percent holding</li>
<li>
		Roper Industries making up 8.2 percent</li>
<li>
		Veolia Environnement VE SA (ADR) (OTC: <a class="ticker" href="/stock/veoey#OTC">VEOEY</a>) coming in at 7.9 percent</li>
</ul>

	PIO is down 5 percent over the last 12 months, up 5 percent over the last six months and up 2 percent year-to-date. The ETF has an expense ratio of 0.82 percent.
<h3>
	First Trust Water Index Fund</h3>

	The First Trust ISE Water Index Fund (ETF) (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>) consists of 37 companies across six sectors within the potable and wastewater industry.

	The top individual holdings includes
<ul>
<li>
		Badger Meter, Inc. (NYSE: <a class="ticker" href="/stock/bmi#NYSE">BMI</a>) at 4.4 percent</li>
<li>
		Pentair plc. Ordinary Share (NYSE: <a class="ticker" href="/stock/pnr#NYSE">PNR</a>) making up 4.2 percent</li>
<li>
		California Water Service Group (NYSE: <a class="ticker" href="/stock/cwt#NYSE">CWT</a>) totaling 4.2 percent as well</li>
</ul>

	FIW is down 8 percent over the last 12 months, up 2 percent over the last six months and down 5 percent year-to-date. The water ETF has an expense ratio of 0.60 percent.

	Image Credit: <a href="http://pixabay.com/en/tap-drought-fountain-357252/">Public Domain</a>

GBERY

VEOEY

California Drought And Water ETFs

According to the most recent <a href=" http://droughtmonitor.unl.edu/" target="_blank">U.S. Drought Monitor</a> report, drought conditions in the United States have moderated a bit recently due to some above-average summer rainfall accumulations. Yet, more than 46 percent of the contiguous U.S. is experiencing some drought conditions. The west and southwest have been hardest hit, with some troubled areas in the southeast as well.

	There is little doubt that severe and ongoing droughts in places ranging from Brazil to California are having a significant economic impact. That impact is felt first in commodities, which should be a concern for commodities investors.
<h3>
	Drought Impact On Commodities And Stocks</h3>

	Take coffee, for instance. The recent drought in Brazil, the world&#39;s biggest producer of coffee, has already sent coffee prices sharply higher. According to NPR, the nation could <a href="http://www.npr.org/2014/02/23/280770928/drought-could-drain-more-than-brazils-coffee-crop" target="_blank">lose 10 percent of its coffee crop by 2020</a>.

	That&#39;s not only bad for the coffee growers, but for the likes of Starbucks Corporation (NASDAQ: <a class="ticker" href="/stock/sbux#NASDAQ">SBUX</a>) (and ultimately its customers and investors) as well. Starbucks shares are only up about one percent year-to-date.

	Related Link: <a href="http://www.benzinga.com/personal-finance/financial-advisors/14/09/4826943/2-great-ways-to-invest-in-commodities" target="_blank">2 Great Ways To Invest In Commodities</a>

	California, almost all of which is in what the USDA identifies as Exceptional or Extreme drought, is an agricultural powerhouse.

	A lack of the likes of tomatoes, peppers and avocados affect food processors like ConAgra Foods Inc (NYSE: <a class="ticker" href="/stock/cag#NYSE">CAG</a>) and General Mills, Inc. (NYSE: <a class="ticker" href="/stock/gis#NYSE">GIS</a>), as well as restaurants such as Chipotle Mexican Grill, Inc. (NYSE: <a class="ticker" href="/stock/cmg#NYSE">CMG</a>). Prices get passed on to consumers, but that can lead to fewer sales and often fewer profits. All three have so far this year outperformed the S&amp;P 500.

	The prices of beef and dairy rise too, as feed gets more expensive and water scarce. <a href="http://ers.usda.gov/topics/in-the-news/california-drought-2014-farm-and-food-impacts/california-drought-2014-food-prices-and-consumers.aspx#.VAdwLmPcPHo" target="_blank">According to the USDA</a>: &quot;In fact, fluid milk was seen as one barometer of the magnitude and duration of the impacts of the 2012 drought due to its perishability and strong dependence on commodities used as animal feed.&quot;

	The effects of the drought then spread to agricultural equipment makers such as AGCO Corporation (NYSE: <a class="ticker" href="/stock/agco#NYSE" style="font-size: 13px;">AGCO</a>) and Deere &amp; Company&nbsp;(NYSE: <a class="ticker" href="/stock/de#NYSE" style="font-size: 13px;">DE</a>) (both down more than eight percent year-to-date) and then to other industries and sectors.
<h3>
	What Are Investors To Do?</h3>

	Evan Smith of U.S. Global&#39;s Global Resources Fund recommends <a href="http://usatoday30.usatoday.com/money/markets/story/2012-08-26/drought-food-prices-investing/57334442/1" target="_blank">looking beyond the current crop</a> for profits. When grain prices are high and inventory low, he says, farmers will grow more aggressive in planting for next year&#39;s to profit. Monsanto Company (NYSE: <a class="ticker" href="/stock/mon#NYSE">MON</a>), which produces drought resistant seeds, has benefited and will do so again; shares are up almost 28 percent in the past two years. Fertilizer producers like Potash Corp. of Saskatchewan (NYSE: <a class="ticker" href="/stock/pot#NYSE">POT</a>) are likely to see continued strong demand as well. Shares are up about 14 percent in the past year.

	See also: <a href="http://www.benzinga.com/media/cnbc/14/09/4826658/scott-nations-is-bearish-on-corn" target="_blank">Scott Nations Is Bearish On Corn</a>

	Commodities investors have the choice of moving to commodities less affected by drought or into emerging or other markets not currently affected by water shortages. And there is diversification.

	<a href="http://www.marketwatch.com/story/food-and-water-investments-weather-drought-2012-07-20?page=1" target="_blank">Morningstar&#39;s Abraham Bailin</a> follows commodity exchange-traded funds (ETFs), and he likes PowerShares DB Commodity Index Tracking Fund ETF (NYSE: <a class="ticker" href="/stock/dbc#NYSE">DBC</a>) for its diversification across commodities. The United States Commodity Index Fund (NYSE: <a class="ticker" href="/stock/usci#NYSE">USCI</a>) offers relative stability as well as diversification. Note though that both retreated as summer wound down.

	Investors looking for other ways to benefit from the drought may want to focus on water. The first place to look is at water utility companies like American Water Works (NYSE: <a class="ticker" href="/stock/awk#NYSE">AWK</a>) and Aqua America (NYSE: <a class="ticker" href="/stock/wtr#NYSE">WTR</a>). Shares of each are up more than 80 percent in the past five years. Pall Corp. (NYSE: <a class="ticker" href="/stock/pll#NYSE">PLL</a>) makes water filtration systems and is up more than 150 percent in five years. Lindsay (NYSE: <a class="ticker" href="/stock/lnn#NYSE">LNN</a>) makes irrigation systems and is up about 80 percent in five years.

	For ETF investors, there is the Guggenheim S&amp;P Global Water ETF (NYSE: <a class="ticker" href="/stock/cgw#NYSE">CGW</a>), First Trust ISE Water ETF (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>), PowerShares Water Resources ETF (NYSE: <a class="ticker" href="/stock/pho#NYSE">PHO</a>) and PowerShares Global Water ETF (NYSE: <a class="ticker" href="/stock/pio#NYSE">PIO</a>). All are up at least 40 percent in the past five years, despite recent pullbacks. The Pax World Global Environmental Markets Fund is about 40 percent invested in water, but The Calvert Global Water Fund invests exclusively in water.

	At the time of this writing, the author had no position in the mentioned equities.

	Keep up with all the latest breaking news and trading ideas by following Benzinga on <a href="https://twitter.com/Benzinga" target="_blank">Twitter</a>.

Education

General

AGCO

PowerShares DBmmodity Index Optimum Yield Diversified Fund

LAYN

SBUX

USCI

How Droughts Affect The Stock Market

ETF Outlook for Friday, November 8, 2013

	FirstTrust ISE Water ETF (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>)

	One of the largest water utilities in the U.S. reported earnings this morning and the stock was moving higher pre-market. Aqua America (NYSE: <a class="ticker" href="/stock/wtr#NYSE">WTR</a>) beat earnings by a penny and missed on revenue estimates, but it did not keep investors away from bidding the stock higher.

	WTR is a top ten holding in FIW and because it is a well-known and large water utility it should have some spill over to the other stocks in its sector. The other big name to keep an eye on in the sector that is also in the FIW is American Water Works (NYSE: <a class="ticker" href="/stock/awk#NYSE">AWK</a>).

	SPDR Consumer Discretionary ETF (NYSE: <a class="ticker" href="/stock/xly#NYSE">XLY</a>)

	Walt Disney Corp (NYSE: <a class="ticker" href="/stock/dis#NYSE">DIS</a>) reported what appeared to be decent earnings yesterday after the bell, but the stock is trading lower by 1 percent pre-market. The parks and resorts segment was up 8 percent, but media networks only increasing by 1 percent. The big driver could have been the pushing back of the release of Star Wars 7 to late 2015 from the summer of 2015.

	DIS makes up nearly 6 percent of XLY and is the number three holding in the ETF. The stock should not have too much of an affect on the diverse ETF, but if DIS decides to make a big move it will move the needle.

	iShares MSCI France ETF (NYSE: <a class="ticker" href="/stock/ewq#NYSE">EWQ</a>)

	Last night Standard &amp; Poor’s downgraded France to AA from AA+, but also raised the outlook from negative to stable. The mixed message was enough to send French shares lower and the yield on French bonds higher.

	The ratings firm cited the country’s inability to lower spending as well as the low economic growth as two deciding factors for the downgrade. Shares of EWQ are lower pre-market by nearly 1 percent on the news. The ETF is trading 3.5 below a multi-year high it set two weeks ago and if it fails to hold the $27 area it would be another negative sign technically.

	iShares Dow Jones U.S. Pharmaceutical ETF (NYSE: <a class="ticker" href="/stock/ihe#NYSE">IHE</a>)

	All major U.S. sectors closed lower yesterday, but the best of the group was the pharmaceuticals with IHE ending the session lower by 0.66 percent. The ETF has lagged the market slightly in the last three months, however with it looking more and more like a short-term pullback is likely, IHE could be an ETF to watch.

	The pharmaceutical sector tends to outperform in times of volatility and uncertainty or when the market is simply overbought and due for a pullback. A combination of the scenarios mentioned is happening now and IHE could be a place to park some money.

Previews

Pre-Market Outlook

iShares Dow Jones US Pharmaceuticals Index Fund

Select Sector SPDR-Consumer Discretionary

ETF Outlook for Friday, November 8 (FIW, XLY, EWQ, DIS, IHE)

The rise in the global population created an increased demand for clean water around the world.

	Unfortunately there are also a growing number of people that do not have access to clean water on a regular basis. On top of clean water, according to the World Health Organization (WHO), almost 2.5 billion people lack adequate sanitation facilities.

	As a result, WHO estimates 2 million deaths per year are related to diarrheal disease linked to unsafe water and sanitation.

	Those of us lucky enough to live in a developed country have clean running water from a faucet and more than likely bottles of water in the refrigerator. Due to this upbringing, most investors will overlook the water epidemic around the world. From an investing viewpoint there is money to be made with what many refer to as “blue gold."

	When it comes to investing in water-related stocks the two largest opportunities lie in the industrials and the utilities. The best strategy is to consider using an ETF that will offer exposure to a variety of water-related stocks.

	PowerShares Water Resource ETF (NYSE: <a class="ticker" href="/stock/pho#NYSE">PHO</a>)

	The ETF is heavily invested in the industrial side of the sector with 66 percent of the allocation in the stocks. Water utilities make up 19 percent of the ETF. The 29 stocks that make up the ETF are either based in the U.S. or trade on an American exchange as an ADR. The underlying index it tracks is composed of companies that create products to conserve and purify water.

	The top holdings are Xylem (NYSE: <a class="ticker" href="/stock/xyl#NYSE">XYL</a>)and Flowserve (NYSE: <a class="ticker" href="/stock/fls#NYSE">FLS</a>), which make up 18 percent of the entire ETF. The two companies are industrials that supply the water sector with pumps and other products. The ETF is up 20 percent in 2013 and is trading at an all-time high. The expense ratio is 0.62 percent.

	PowerShares Global Water ETF (NYSE: <a class="ticker" href="/stock/pio#NYSE">PIO</a>)

	Similar to PHO, this ETF also concentrates on companies that conserve and purify water. The one major difference is that the stocks that make up PIO are not limited to trading on a U.S. stock exchange. Only 47 percent of the ETF is invested in the U.S., with 16 percent in the U.K. and 12 percent in France.

	By investing more overseas the ETF expands its exposure to water utility stocks that make up 46 percent of the allocation, the same as the industrial stocks. The top holdings, which make up 17 percent, are FLS and Severn Trent PLC, a U.K.-based water utility.

	Year-to-date the ETF is up 22 percent and it charges an annual expense ratio of 0.75 percent.

	Guggenheim S&amp;P Global Water ETF (NYSE: <a class="ticker" href="/stock/cgw#NYSE">CGW</a>)

	This ETF takes a similar approach to investing as PIO with nearly equal exposure to the industrials and utilities as well as exposure outside of the U.S. This is probably why the return this year has been 20 percent, nearly inline with PIO. The annual expense ratio is 0.70 percent. Of the 54 stocks in the ETF, the top two holdings are Pentair (NYSE: <a class="ticker" href="/stock/pnr#NYSE">PNR</a>) and Geberit AG, which make up 13 percent of the allocation.

	First Trust ISE Water Index ETF (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>)

	The basket of 36 stocks relies more on the industrials (65 percent) than the utilities (22 percent). The makeup is not too far from that of PHO with more industrial stocks at the top of the allocation.

	The top two holdings include XYL and Rexnord Corp (NYSE: <a class="ticker" href="/stock/rxn#NYSE">RXN</a>), which make up 9 percent of the portfolio. RXN is a motion control maker that focuses on the water industry. The ETF is up 25 percent in 2013 and charges an expense ratio of 0.60 percent.

	The facts are laid out for the four water ETFs and the next step would be for interested investors to choose the best for their portfolio. Based on performance FIW would appear to be the best option.

	The other argument for FIW is that its heavy focus on industrials would appear to be the best allocation considering the infrastructure needed worldwide to meet the growing water demand. Alas, the decision is in your hands.

The Best Water ETF (PHO, PIO, CGW, FIW)

World Water Day was actually celebrated last Friday, but 2013 is, in some circles, being dubbed the year of international water cooperation. It is not surprising that more attention is being paid to water infrastructure and the water investment thesis.

	Last week, the American Society of Civil Engineers released a report in which graded the U.S. water infrastructure system "D," up only slightly from the "D-" the organization levied a few years ago.

	"The ASCE's Failure to Act series (2011-2013), water/wastewater infrastructure needs are estimated at $126 billion by 2020, but funding is projected at only $42 billion, leaving a gap of $84 billion," according to S&amp;P Capital IQ. "There are estimated to be between 700,000 and 800,000 miles of public sewer mains in the U.S., and over one million miles of drinking water systems, with many of these pipes well over 100 years old, meaning they are either past or nearing the end of their useful life."

	Escalating water needs in the U.S. and throughout the world could spell opportunities in this sub-sector for investors, and there are several ETFs with which to play that trend. However, S&amp;P Capital IQ is tepid on these funds.

	The research firm has an Underweight rating on the Guggenheim S&amp;P Global Water Index Fund (NYSE: <a class="ticker" href="/stock/cgw#NYSE">CGW</a>). CGW carries an overall Underweight ETF ranking, largely reflecting an Underweight ranking for performance analytics, said S&amp;P.

	CGW is home to 51 stocks and $228.6 million in assets under management. The ETF does make good on the implication that it is a global fund as U.S.-based companies represent just 37.5 percent of the ETF's weight. The U.K. accounts for 19 percent of CGW's country weight with Switzerland garnering an allocation of just over eight percent. CGW is up about seven percent year-to-date and carries a beta of 0.89 against the S&amp;P 500, <a href="http://guggenheiminvestments.com/products/etf/cgw">according to Guggenheim data</a>.

	S&amp;P Capital IQ is a bit more enthusiastic about the First Trust ISE Water Index Fund (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>), which it rates Marketweight. The $108 million ETF is home to 37 stocks with top holdings including Flowserve (NYSE: <a class="ticker" href="/stock/fls#NYSE">FLS</a>) and Pall (NYSE: <a class="ticker" href="/stock/pll#NYSE">PLL</a>).

	FIW's median market cap is just over $2.2 billion, implying a bit of a small-cap bias, but that has worked in favor of the ETF this year as it is up more than 10 percent. The rub is that FIW has a beta of 1.12 and a three-year standard deviation that is nearly 300 basis points higher than that of the Russell 3000 Index, <a href="http://www.ftportfolios.com/Retail/Etf/EtfSummary.aspx?Ticker=FIW">according to First Trust data</a>.

	S&amp;P also has a Marketweight rating on the PowerShares Water Resources Portfolio (NYSE: <a class="ticker" href="/stock/pho#NYSE">PHO</a>), by far the largest water ETF with nearly $925 million in assets. Only 3.6 percent of PHO's lineup is devoted to large-caps with small-caps accounting for over 43 percent. PHO, which celebrate its eighth birthday later this year, is up about 11 percent year-to-date.

	While the ratings on these ETFs are not jaw-dropping, S&amp;P does point out some favorable long-term trends.

	"Meanwhile, the cost of water continues to rise, as budget-strapped municipalities pass the costs for upgrades and repairs on to consumers," said the research firm. "However, water reuse is growing in popularity for irrigation and other uses that don't really require the same costly treatment as for potable water. More municipalities are seeking reuse and desalination projects, as technology continues to become more cost efficient. Thus, we think long-term prospects are very favorable for flow control and filtration related water treatment companies."

	The $210 million The PowerShares Global Water Portfolio (NYSE: <a class="ticker" href="/stock/pio#NYSE">PIO</a>) was not mentioned in the S&amp;P note. At the country level, PIO is somewhat comparable to CGW, the aforementioned Guggenheim ETF. PIO allocates a little more than 40 percent of its weight to U.S. stocks with the U.K. and France combining for more than 31 percent of the fund's weight.

	PIO was up 6.6 percent year-to-date heading into Monday's session. The ETF is more expensive than its domestic counterpart with annual fees of 0.75 percent compared to 0.62 percent for PHO.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Short Ideas

Global

Intraday Update

Say 'Happy World Water Day' With These ETFs

Matt Damon won’t flush the toilet until everyone in the world has clean water.

	Or, so the actor says in a new <a href="https://www.youtube.com/watch?v=yX3Cyu_sfgk">YouTube video</a> released yesterday and well on its way to going viral according to the <a href="http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-damons-water-charity-hopes-video-campaign-will-go-viral-20130211,0,7630750.story">L.A. Times</a>.

	Damon’s threat is all part of a humorous three-minute spoof released by his nonprofit group, Water.org designed to draw attention to the worldwide water crisis and the first in a series of videos shot at YouTube studios in Playa Vista, Calif.

	In the video, Damon holds a mock news conference to announce that he won't use the toilet until people pay more attention to the water crisis and fields comical questions from a room filled with “actor” reporters.

	Damon directs people to Strikewithme.org, where they can learn more about the water crisis, donate money and sign up to integrate their social media accounts with the effort.

	While Damon’s threat is satire, the water crisis is real. According to Damon, 780 million people worldwide lack access to clean water. In addition, <a href="http://moneymorning.com/2013/02/06/water-stocks-dont-overlook-this-1-trillion-opportunity/">Money Morning</a> reports that most water delivery systems throughout the world are badly in need of repair or replacement. In the United States alone, estimates of water infrastructure needs run as high as $1 trillion.

	The problem extends beyond the United States. The World Water Council says that current annual infrastructure spending of about $80 billion will double just within the next several years.

	The effort that goes into making water available to billions of people -- storage, making it potable, getting it to users reliably – isn’t just about profit opportunities – it’s about humanitarian needs as well. That’s the message Damon and his organization are trying to spread.

	Investors interested in both making a profit and helping improve the world’s water supply may want to consider:

	Xylem Inc. (NYSE: <a class="ticker" href="/stock/xyl#NYSE">XYL</a>), where water infrastructure accounts for half of the company’s revenue, was up nearly 2 percent on Tuesday to close at $27.95. It also pays a 1.5 percent dividend.

	Danaher Corp (NYSE: <a class="ticker" href="/stock/dhr#NYSE">DHR</a>) makes water instrumentation and disinfection systems. It closed up 0.5 percent pays a dividend of 0.2 percent.

	Northwest Pipe Co. (NASDAQ: <a class="ticker" href="/stock/nwpx#NASDAQ">NWPX</a>), is pure water play manufacturing large-scale pipes for drinking water systems. This small cap stock has an average volume of only 34,700 shares but is in a perfect position for capitalizing on increased infrastructure expenditures.

	Investing in water isn't confined to stocks. Water ETFs include:

	PowerShares Global Water Portfolio (NYSE: <a class="ticker" href="/stock/pio#NYSE">PIO</a>), an ETF that focuses on water treatment companies, but includes stocks in emerging markets as well as the U.S.

	Guggenheim S&amp;P Global Water Index (NYSE: <a class="ticker" href="/stock/cgw#NYSE">CGW</a>) tracks the Standard &amp; Poor's Global Water Index.

	First Trust ISE Water Index Fund (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>) is based on an index significantly levered to potable and wastewater industries.

Events

NWPX

Matt Damon's Pledge to Not Flush the Toilet May Boost Water Stocks

<div class="entry-content">

		The Industrials sector ranks fourth out of the ten sectors as detailed in my <a href="http://blog.newconstructs.com/2012/10/08/sector-rankings-for-etfs-mutual-funds/">sector rankings for ETFs and mutual funds</a>. It gets my Neutral rating, which is based on an aggregation of the ratings of 16 ETFs and 18 mutual funds in the Industrials sector as of October 9, 2012. Prior reports on the best &amp; worst ETFs and mutual funds in every sector and style are <a href="http://www.newconstructs.com/nc/research/report/etf-and-fund-reports.htm">here</a>.

		Figures 1 and 2 show the five best and worst-rated ETFs and mutual funds in the sector. Not all Industrials sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 20 to 368), which creates drastically different investment implications and ratings. The best ETFs and mutual funds allocate more value to Attractive-or-better-rated stocks than the worst ETFs and mutual funds, which allocate too much value to Neutral-or-worse-rated stocks.

		To <a href="http://blog.newconstructs.com/2012/10/09/how-to-find-the-best-etfs-2/">identify the best</a> and <a href="http://blog.newconstructs.com/2012/04/05/how-to-avoid-the-worst-etfs/">avoid the worst</a> ETFs and mutual funds within the Industrials sector, investors need a <a href="http://blog.newconstructs.com/2011/11/23/predictive-fund-rating-methodology/">predictive rating</a> based on (1) <a href="http://blog.newconstructs.com/2011/11/22/portfolio-management-rating-methodology/">stocks ratings</a> of the holdings and (2) the <a href="http://blog.newconstructs.com/2011/10/28/total-annual-costs-methodology/">all-in expenses</a> of each ETF and mutual fund. Investors need not rely on backward-looking ratings. My fund rating methodology is detailed <a href="http://blog.newconstructs.com/2011/11/23/predictive-fund-rating-methodology/">here</a>.

		Investors should not buy any Industrials ETFs or mutual funds because none get an Attractive-or-better rating. If you must have exposure to this sector, you should buy a basket of Attractive-or-better rated stocks and avoid paying undeserved fund fees. Active management has a <a href="http://blog.newconstructs.com/2012/09/17/less-than-1-of-managers-deliver-alpha-here-are-details/">long history</a> of not paying off.

		See ratings and reports on all ETFs and mutual funds in this sector on my <a href="http://www.newconstructs.com/nc/fundscreener/fund-screener.htm">free mutual fund and ETF screener</a>.
<div>

			Figure 1: ETFs with the Best &amp; Worst Ratings &ndash; Top 5
</div>

		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/IndustrialsFig1.jpg"><img alt="" class="aligncenter size-full wp-image-4700" height="234" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/IndustrialsFig1.jpg" title="IndustrialsFig1" width="320" /></a>

		* Best ETFs exclude ETFs with TNA&rsquo;s less than 100 million for inadequate liquidity.
<div>

			Sources: New Constructs, LLC and company filings
</div>

		<a href="http://bit.ly/UPRJt6">Four ETFs</a> are excluded from Figure 1 because their total net assets (TNA) are below $100 million and do not meet our liquidity standards.
<div>

			Figure 2: Mutual Funds with the Best &amp; Worst Ratings &ndash; Top 5
</div>

		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/IndustrialsFig2.jpg"><img alt="" class="aligncenter size-full wp-image-4699" height="234" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/IndustrialsFig2.jpg" title="IndustrialsFig2" width="320" /></a>

		* Best mutual funds exclude funds with TNA&rsquo;s less than 100 million for inadequate liquidity.
<div>

			Sources: New Constructs, LLC and company filings
</div>

		Two ICON Funds: ICON Industrials Funds (NYSE: ICTRX) and (NYSE: ICICX) are excluded from Figure 2 because its total net assets (TNA) are below $100 million and do not meet our liquidity standards.

		Industrial Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xli#NYSE">XLI</a>) is my top-rated Industrials ETF and Fidelity Select Portfolios: Industrial Equipment Portfolio (NYSE: <a class="ticker" href="/stock/fscgx#NYSE">FSCGX</a>) is my top-rated Industrials mutual fund. Both earn my Neutral rating.

		First Trust ISE Water Index Fund (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>) is my worst-rated Industrials ETF and Rydex Series Funds: Transportation Fund (NYSE: RYTSX) is my worst-rated Industrials mutual fund. Both earn my Dangerous rating.

		Figure 3 shows that 117 out of the 480 stocks (over 36% of the total net assets) held by Industrials ETFs and mutual funds get an Attractive-or-better rating. Despite the existence of Attractive-or-better Industrials stocks, there is not a single Industrials ETF or mutual fund that earns an Attractive-or-better rating. The majority of the total net assets of Industrials ETFs and mutual funds is allocated to Neutral-or-worse-rated stocks.

		The takeaway is: mutual fund managers allocate too much capital to low-quality stocks and Industrials ETFs hold poor quality stocks.
<div>

			Figure 3: Industrials Sector Landscape For ETFs, Mutual Funds &amp; Stocks
</div>
<div>

			<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/IndustrialsFig3.jpg"><img alt="" class="aligncenter size-full wp-image-4698" height="144" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/IndustrialsFig3.jpg" title="IndustrialsFig3" width="405" /></a>

			Sources: New Constructs, LLC and company filings
</div>

		As detailed in &ldquo;<a href="http://blog.newconstructs.com/2012/07/20/low-cost-funds-dupe-investors-2/">Cheap Funds Dupe Investors</a>&rdquo;, the fund industry offers many cheap funds but very few funds with high-quality stocks, or with what I call good <a href="http://blog.newconstructs.com/2011/11/22/portfolio-management-rating-methodology/">portfolio management</a>.

		Investors should avoid all Industrials ETFs and mutual funds. Instead of paying fees to own a portfolio of unattractive stocks, investors who desire exposure to the Industrials sector should focus on owning a basket of stocks that earn an Attractive-or-better rating.

		United Technologies (NYSE: <a class="ticker" href="/stock/utx#NYSE">UTX</a>) is one of my favorite stocks held by Industrials ETFs and mutual funds and earns my Attractive rating. UTX is an impressively profitable company, turning in <a href="http://www.newconstructs.llc/nc/help/glossary.htm#roicDef">returns on invested capital (ROIC)</a> that consistently exceed 12%. ROIC is the primary driver of shareholder value creation and it is essential for management to keep ROIC above the <a href="http://www.newconstructs.llc/nc/help/glossary.htm#helpWacc">weighted average cost of capital (WACC)</a>. The Industrials sector is typically capital intensive and many companies struggle to maintain returns on invested capital above WACC. In fact, the median ROIC in 2011 for the 421 Industrials was 7.4%. UTX earned an ROIC of 12.7%, placing UTX in the top quintile of all Industrials. The company is profitable and efficient, but a great company is not always a great stock to buy. UTX earns an Attractive rating because it&rsquo;s a great company with a cheap stock price. The market has low expectations for the future performance of UTX at $77.33 as of 10/19/12. The current valuation implies that the company&rsquo;s profits will decline permanently by 7%. For a company that has seen consistent growth in profitability, those expectations seem too pessimistic. From Otis Elevators to Pratt &amp; Whitney aircraft engines, United Technologies manufactures products that are made for going up. I would expect the stock price to go up as well as the market&rsquo;s expectations align with UTX&rsquo;s profitable performance.

		Simpson Manufacturing Co (NYSE: <a class="ticker" href="/stock/ssd#NYSE">SSD</a>) is one of my least favorite stocks held by Industrials ETFs and mutual funds and earns my Very Dangerous rating. The primary reason SSD earns a Very Dangerous rating is that SSD&rsquo;s Net Income over the past few years shows a misleading trend. SSD&rsquo;s Net Income has been growing, but its <a href="http://www.newconstructs.llc/nc/help/glossary.htm#epDef">economic earnings</a> have been declining. A steady decline in the company&rsquo;s <a href="http://www.newconstructs.llc/nc/help/glossary.htm#nopat">NOPAT</a> from its 2006 high of $107.43 million to only $39.34 million in fiscal year 2011 is not exactly a promising trend. In fact, SSD&rsquo;s <a href="http://www.newconstructs.llc/nc/help/glossary.htm#rarDef">economic earnings margin</a> has been negative every year since 2008 though the company has not reported an accounting earnings loss. Rising accounting earnings is a dangerous sign when the true economic earnings are steadily deteriorating. Worst of all, to justify its current valuation at $28.59 &nbsp;as of10/9/12, the company must achieve profit growth of 15% compounded annually for the next 16 years. Those are lofty expectations for a company whose profits have declined markedly over the past five years.

		421 stocks of the 3000+ I cover are classified as Industrials stocks, but due to style drift, Industrials ETFs and mutual funds hold 480 stocks.

		Figures 4 and 5 show the rating landscape of all Industrials ETFs and mutual funds.

		Our <a href="http://blog.newconstructs.com/2012/10/08/sector-rankings-for-etfs-mutual-funds/">Sector Rankings for ETFs and Mutual Funds</a> report ranks all sectors and highlights those that offer the best investments.
<div>

			Figure 4: Separating the Best ETFs From the Worst ETFs
</div>
<div>

			<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/IndustrialsFig4.jpg"><img alt="" class="aligncenter size-full wp-image-4697" height="245" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/IndustrialsFig4.jpg" title="IndustrialsFig4" width="409" /></a>

			Sources: New Constructs, LLC and company filings
</div>
<div>

			Figure 5: Separating the Best Mutual Funds From the Worst Mutual Funds
</div>
<div>

			<a href="http://blog.newconstructs.com/wp-content/uploads/2012/10/IndustrialsFig5.jpg"><img alt="" class="aligncenter size-full wp-image-4696" height="245" src="http://blog.newconstructs.com/wp-content/uploads/2012/10/IndustrialsFig5.jpg" title="IndustrialsFig5" width="409" /></a>

			Sources: New Constructs, LLC and company filings
</div>

		Review my <a href="http://www.newconstructs.com/nc/fundscreener/fund-screener.htm?task=ACTION_CATEGORY_TYPE_SEARCH&amp;selectedTypes=0,1&amp;selectedCategoryIds=5d882170114e11e1bb8900188b533b34">full list</a> of ratings and rankings along with reports on all 16 ETFs and 18 mutual funds in the Industrials sector.

		Disclosure: I receive no compensation to write about any specific stock, sector or&nbsp;theme.
</div>

Broad U.S. Equity ETFs

FSCGX

Best & Worst ETFs & Mutual Funds: Industrials Sector

<div class="entry-content">

		The Industrials sector ranks fourth out of the ten sectors as detailed in my <a href="http://blog.newconstructs.com/2012/07/10/roadmap-to-the-best-worst-etf-mutual-fund-sectors/">sector roadmap</a>. It gets my Neutral rating, which is based on aggregation of ratings of 17 ETFs and 18 mutual funds in the Industrials sector as of July 11, 2012. Reports on the best &amp; worst ETFs and mutual funds in every sector and style are on <a href="http://www.newconstructs.com/nc/research/report/etf-and-fund-reports.htm">here</a>.

		Figures 1 and 2 show the five best and worst-rated ETFs and mutual funds in the sector. Not all Industrials sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 20 to 368), which creates drastically different investment implications and ratings. The best ETFs and mutual funds allocate more value to Attractive-or-better-rated stocks than the worst ETFs and mutual funds, which allocate too much value to Neutral-or-worse-rated stocks.

		To <a href="http://blog.newconstructs.com/2012/04/03/how-to-find-the-best-etfs/">identify the best</a> and <a href="http://blog.newconstructs.com/2012/04/05/how-to-avoid-the-worst-etfs/">avoid the worst</a> ETFs and mutual funds within the Industrials sector, investors need a <a href="http://blog.newconstructs.com/2011/11/23/predictive-fund-rating-methodology/">predictive rating</a> based on (1) <a href="http://blog.newconstructs.com/2011/11/22/portfolio-management-rating-methodology/">stocks ratings</a> of the holdings and (2) the <a href="http://blog.newconstructs.com/2011/10/28/total-annual-costs-methodology/">all-in expenses</a> of each ETF and mutual fund. Investors need not rely on backward-looking ratings. My fund rating methodology is detailed <a href="http://blog.newconstructs.com/2011/11/23/predictive-fund-rating-methodology/">here</a>.

		Investors should not buy any Industrials ETFs or mutual funds because none get an Attractive-or-better rating. If you must have exposure to this sector, you should buy a basket of Attractive-or-better-rated stocks and avoid paying undeserved fund fees. Active management has a long <a href="http://blog.newconstructs.com/wp-content/uploads/2012/02/Failure-of-Active-Management1.pdf">history</a> of not paying off.

		See ratings and reports on all ETFs and mutual funds in this sector on my free <a href="http://www.newconstructs.com/nc/fundscreener/fund-screener.htm?task=ACTION_CATEGORY_TYPE_SEARCH&amp;selectedTypes=0,1&amp;selectedCategoryIds=5d882170114e11e1bb8900188b533b34">mutual fund and ETF screener</a>.
<div>

			Figure 1: ETFs with the Best &amp; Worst Ratings &ndash; Top 5
</div>

		<a href="http://blog.newconstructs.com/wp-content/uploads/2012/07/Industrials1.jpg"><img alt="" class="aligncenter size-full wp-image-4159" height="235" src="http://blog.newconstructs.com/wp-content/uploads/2012/07/Industrials1.jpg" title="Industrials1" width="338" /></a>

		* Best ETFs exclude ETFs with TNA&rsquo;s less than 100 million for inadequate liquidity.
<div>

			Sources: New Constructs, LLC and company filings
</div>

		<a href="http://bit.ly/NLS3GU">Seven ETFs</a> are excluded from Figure 1 because their total net assets (TNA) are below $100 million and do not meet our liquidity standards.
<div>

			Figure 2: Mutual Funds with the Best &amp; Worst Ratings &ndash; Top 5

			<a href="http://blog.newconstructs.com/wp-content/uploads/2012/07/Industrials2.jpg"><img alt="" class="aligncenter size-full wp-image-4158" height="228" src="http://blog.newconstructs.com/wp-content/uploads/2012/07/Industrials2.jpg" title="Industrials2" width="338" /></a>

			* Best mutual funds exclude funds with TNA&rsquo;s less than 100 million for inadequate liquidity.
</div>
<div>

			Sources: New Constructs, LLC and company filings
</div>

		<a href="http://bit.ly/LfQZ0B">Four mutual funds</a> are excluded from Figure 2 because their total net assets (TNA) are below $100 million and do not meet our liquidity standards.

		Industrials Select Sector SPDR (XLI) is my top-rated Industrials ETF and Fidelity Select Portfolios: Industrial Equipment Portfolio (FSCGX) is my top-rated Industrials mutual fund. Both earn my Neutral rating.

		First Trust ISE Water Index Fund (FIW) is my worst-rated Industrials ETF and Rydex Series Funds: Transportation Fund (RYTSX) is my worst-rated Industrials mutual fund. Both earn a Dangerous-or-worse rating.

		Figure 3 shows that only 391 out of the 518 stocks (over 63% of the total net assets) held by Industrials ETFs and mutual funds get a Neutral-or-worse rating. There are, simply, not many good stocks in this sector, which is why none of the 17 ETFs and 18 mutual funds are worthy buying. It is refreshing to see that 90% of the value allocated to ETFs is allocated to the best rated ETFs but its equally alarming to see that 73% of the value allocated to mutual funds are allocated to Dangerous-rated mutual funds.

		The takeaways are: mutual fund managers allocate too much capital to low-quality stocks and Industrials ETFs hold poor quality stocks.
<div>

			Figure 3: Industrials Sector Landscape For ETFs, Mutual Funds &amp; Stocks
</div>
<div>

			<a href="http://blog.newconstructs.com/wp-content/uploads/2012/07/Industrials3.jpg"><img alt="" class="aligncenter size-full wp-image-4157" height="141" src="http://blog.newconstructs.com/wp-content/uploads/2012/07/Industrials3.jpg" title="Industrials3" width="410" /></a>

			Sources: New Constructs, LLC and company filings
</div>

		As detailed in &ldquo;<a href="http://blog.newconstructs.com/2012/05/09/low-cost-funds-dupe-investors/">Cheap Funds Dupe Investors</a>&rdquo;, the fund industry offers many cheap funds but very few funds with high-quality stocks, or with what I call good <a href="http://blog.newconstructs.com/2011/11/22/portfolio-management-rating-methodology/">portfolio management</a>.

		Investors need to tread carefully when considering Industrials ETFs and mutual funds, as none of the ETFs or mutual funds are worthy of buying. Investors seeking exposure to the Industrials sector are better off focusing on individual stocks. Review my <a href="http://bit.ly/NuWA1Q">free stock screener</a> for the best stock investments in the Industrials sector.

		Northrop Grumman Corp (NOC) is one of my favorite stocks held by Industrials ETFs and mutual funds and earns my Very Attractive rating. NOC is a cash-generating machine. Since 2009, NOC has generated at least $2.6 billion in <a href="http://www.newconstructs.com/nc/help/glossary.htm#fcfDef">free cash flow</a> (<a href="http://www.newconstructs.com/nc/help/glossary.htm#fcfDef">FCF</a>) each year. And yet the market has an extremely pessimistic view of NOC. Based on its current stock price (~$63.08) the market expects NOC after-tax cash flows (<a href="http://www.newconstructs.com/nc/help/glossary.htm#nopat">NOPAT</a>) to permanently decrease by 50%. These low expectations offer investors a great risk/reward tradeoff.

		GEO Group, Inc. (GEO) is one of my least favorite stocks held by Industrials ETFs and mutual funds and earns my Very Dangerous rating. Unlike NOC, GEO is a value destroyer. GEO has generated negative <a href="http://blog.newconstructs.com/2010/08/05/economic-versus-accounting-earnings/">economic earnings</a> every year since 2000 and negative free cash flow (FCF) nine of the past ten years. To justify its current stock price (~$23.11), GEO must increase profits 6.1% annually for 27 years. Lofty expectations and poor performance are the reasons I&rsquo;m bearish on GEO.

		429 stocks of the 3000+ I cover are classified as Industrials stocks, but due to style drift, Industrials ETFs and mutual funds hold 518 stocks.

		Figures 4 and 5 show the rating landscape of all Industrials ETFs and mutual funds.

		Our <a href="http://blog.newconstructs.com/2012/07/10/roadmap-to-the-best-worst-etf-mutual-fund-sectors/">sector roadmap</a> report ranks all sectors and highlights those that offer the best investments.
<div>

			Figure 4: Separating the Best ETFs From the Worst ETFs
</div>
<div>

			<a href="http://blog.newconstructs.com/wp-content/uploads/2012/07/Industrials4.jpg"><img alt="" class="aligncenter size-full wp-image-4156" height="245" src="http://blog.newconstructs.com/wp-content/uploads/2012/07/Industrials4.jpg" title="Industrials4" width="409" /></a>

			Sources: New Constructs, LLC and company filings
</div>
<div>

			Figure 5: Separating the Best Mutual Funds From the Worst Mutual Funds
</div>
<div>

			<a href="http://blog.newconstructs.com/wp-content/uploads/2012/07/Industrials5.jpg"><img alt="" class="aligncenter size-full wp-image-4155" height="245" src="http://blog.newconstructs.com/wp-content/uploads/2012/07/Industrials5.jpg" title="Industrials5" width="409" /></a>

			Sources: New Constructs, LLC and company filings
</div>

		Review my <a href="http://www.newconstructs.com/nc/fundscreener/fund-screener.htm?task=ACTION_CATEGORY_TYPE_SEARCH&amp;selectedTypes=0,1&amp;selectedCategoryIds=5d882170114e11e1bb8900188b533b34">full list</a> of ratings and rankings along with free reports on all 17 ETFs and 18 mutual funds in the Industrials sector.

		Disclosure: I receive no compensation to write about any specific stock, sector or&nbsp;theme.
</div>

Financial Advisors

Technicals

Market Vectors Environmental Services Index Fund

iShares Trust Dow Jones US Industrial Sector Index Fund

PowerShares Dynamic Industrials Sector Portfolio

PSCI

If one owns the right calendar, then one knows that hardly a day goes by when some obscure holiday or day of recognition doesn't occur. To that end, we'd like to wish our readers a very happy United Nations World Water Day.

World Water Day does serve as a reminder that there is a global water shortage, water is a commodity and there is an <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/03/2394552/are-you-ready-for-water-to-become-a-globally-traded-commodity">investment thesis behind H20</a>. In fact, Fidelity recently asked email recipients "Are you ready for water to become a globally traded commodity?" 

Last year, Citigroup went so far as to say that in the future, water will be traded and transported similarly to how oil and natural gas are traded and transported today. Global demographic trends may see to it that that is NOT the boldest of proclamations.

Still, the water investment thesis can be a mix of tricky and rewarding. There are four water ETFs on the market and all are celebrating World Water Day by trading lower by roughly 1% apiece. That's not celebrating in style, but all three have offered impressive year-to-date returns. This is the lineup:

PowerShares Global Water Portfolio (NYSE: <a class="ticker" href="/stock/pio#NYSE">PIO</a>)
At the start of trading today, the PowerShares Global Water Portfolio was up over 14% year-to-date. Volume is decent with this fund at over 66,000 shares per day and with almost $251 million in assets under management, PIO is arguably larger than most investors realize. It has also been the best performer of the water ETF quartet in 2012. Resistance is stiff for PIO in the $18-$19 area, but should the ETF break through, it could tack on another 10% this year. 

PowerShares Water Resources Portfolio (NYSE: <a class="ticker" href="/stock/pho#NYSE">PHO</a>)
We're not sure why one ETF sponsor needs to have two water ETFs, but that's the case with PowerShares. PHO isn't the firm's "other" water ETF. It is THE PowerShares Water ETF. Pick your poison between PIO and PHO. PIO has been the better performer in 2012, but PHO has an expense ratio of 0.66%, which is cheaper than PIO's fees of 0.75%. PHO is also far larger with almost $880 million in AUM. PHO also has better volume at over 211,000 shares per day.

First Trust ISE Water Index Fund (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>)
The First Trust ISE Water Index Fund is one arguably the most unheralded member of the water ETF quartet, but it's also the second-best performer behind PIO and with an expense ratio of 0.6%, FIW is cheaper than its PowerShares rival. Looking at FIW's chart, there are two ways to play the fund at the moment. Wait for a pullback or a strong volume breakout above $24. Keep in mind that 25,000-30,000 shares could constitute "strong volume" for this ETF.

Guggenheim S&amp;P Global Water Index ETF (NYSE: <a class="ticker" href="/stock/cgw#NYSE">CGW</a>)
We're not knocking the Guggenheim S&amp;P Global Water Index ETF, but it is the worst performer of this group year-to-date. Then again, that's saying something about water ETFs in general because CGW was up almost 11% this year at the start of trading today. CGW is another prime example of an ETF that a lot of folks don't realize just how big it is. Believe it or not, CGW has almost $193 million in AUM.

CGW offers exposure to 10 different countries with the U.S. representing almost 39% of the ETF's weight. There's some slight emerging markets exposure as well with China and Brazil combing for 7% of CGW's country weight.

Happy Water Day? Maybe For Water ETFs (PIO, PHO, CGW)

I couldn't help but notice a new ad on Yahoo! Mail from Fidelity Investments that boldly asks, "Are you ready for water to become a globally traded commodity?" Given the world's economic climate, geopolitical issues, and the planet's track record with oil, I personally would say, "No, I am not ready for water to become a globally traded commodity." I don't want to even imagine living in a society where grocery stores advertise the price per gallon of water on big signs by the side of the road that you can see from the highway. Nevertheless, there are factors that suggest that water will be the world's most sought-after commodity in a handful of decades. <a href="http://thinkingbig.fidelity.com/?immid=00503&amp;imm_pid=77862594&amp;imm_aid=a254070222&amp;buf=99999999">The video accompanying the Fidelity Investments ad</a> is as thought-provoking as it is ominous. The video discusses the respective costs in water to make items like a slice of bread, a cup of coffee, and a hamburger. From the video: "With global population expected to increase by 30 percent by 2050 and more developing nations transitioning to higher standards of living, regional water shortages and peak water issues will become more widespread." The issue of water becomes more complicated in considering the accessibility and availability of drinking water in the years to come. From the video: "Global consumption of water is expected to increase by 40 percent over the next 20 years. And according to some estimates, more than half of the world's population could be living under conditions of water stress by 2025." Thus, the video suggests that water stress could intensify geopolitical affairs and "border disputes" related to the water supply. 
	Even worse, "as water constraints rise, so will food costs." The video portends that as everyone needs water and as the quantity of water on the planet is fixed, the world will need to rely on desalinization efforts, water reuse, and conservation in the future. From the video: "Water...becoming a more costly and regionally more scarce resource will have massive economic, ecological, and geopolitical implications. Think about it." After watching the video, to be honest, I am not too certain as to whether Fidelity Investments wants us to make use of their investing services or run and hide in a doomsday bunker. 
	Whereas water will likely be an issue in the coming decades and whereas water may become a globally traded commodity one day, I'm not sure if it was the intent of Fidelity Investments or not, but after watching the video, I couldn't help but feel a Kafkaesque chill in the air...enough to cloud even the mind of a bullish investor. It's as if one would ask, "If water scarcity is going to lead to the next world war in a future global dystopia, what is the point in investing in anything?" Seriously, after watching that video, I'm kind of wondering, "So are you saying that we should we be investing in water purification and desalinization technology and conservation, or are you saying that we should be investing in <a href="http://www.telegraph.co.uk/science/space/7935505/Stephen-Hawking-mankind-must-move-to-outer-space-within-a-century.html">space colonization efforts</a>?" 
	In any event, I asked in an article late January, "Oil is currently the centerpiece commodity of world trading, but with the fears of a possible water crisis, might water be the world's next oil?" In terms of possible trading and investment ideas, I previously mentioned PowerShares Water Resource ETF (NYSE: <a class="ticker" href="/stock/pho#NYSE">PHO</a>) and American Water Works Co., Inc. (NYSE: <a class="ticker" href="/stock/awk#NYSE">AWK</a>). In terms of ETFs, other possible trading opportunities include the PowerShares Global Water Portfolio (NYSE: <a class="ticker" href="/stock/pio#NYSE">PIO</a>), Guggenheim S&amp;P Global Water Index (NYSE: <a class="ticker" href="/stock/cgw#NYSE">CGW</a>) and First Trust ISE Water Index Fund (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>). 
	As for water stocks, traders can take a look at Aqua America Inc. (NYSE: <a class="ticker" href="/stock/wtr#NYSE">WTR</a>), the York Water Company (NASDAQ: <a class="ticker" href="/stock/yorw#NASDAQ">YORW</a>), California Water Service Group (NYSE: <a class="ticker" href="/stock/cwt#NYSE">CWT</a>), American States Water Company (NYSE: <a class="ticker" href="/stock/awr#NYSE">AWR</a>), and SJW Corp. (NYSE: <a class="ticker" href="/stock/sjw#NYSE">SJW</a>). Water could prove to be quite a lucrative commodity in terms of trading and investing in the not-so-distant future. That being said, the downsides of scarce water should not be overlooked. One has to wonder what human civilization would look like on a planet where half of the global population (numbered in the billions) is living in a state of water stress. Such prospects seem to raise questions regarding the viability of humanity going forward -- and in light of pollution and environmental issues, perhaps questions of the legitimacy of humanity as well. With hope, developments in technology and an emerging Zeitgeist of humanistic economic maturity will work to ensure that there is enough drinkable water for the planet's population.

ACTION ITEMS: Bullish: Traders who believe that believe that water will become a globally traded commodity in the near future might want to consider the following trades: 

<ul><li>Go long on the ETFs and water stocks mentioned above.</li></ul>

<ul><li>Traders could also check out possible real estate investments related to key geographical locations for water.</li></ul>

Bearish: Traders who believe that the global economy will utterly collapse bringing about the fall of human civilization before water even gets a chance to become a globally traded commodity may consider alternate positions: 

<ul><li>You could short the above, or you could always store up bottles of water in the basement. Technically, one might still consider that an investment in water. </li></ul>

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Psychology

Economics

Reviews

YORW

Are You Ready for Water to Become a Globally Traded Commodity?

Under the radar of most investors, The American Water Works Association (AWWA) held its Annual Conference &amp; Exposition (ACE11) last week in Washington, D.C. Featuring over 500 exhibitors, the conference helped highlight many of the water issues facing North America as well as the emerging world. Water is seen by many analysts (including this one) as one of the most important issues facing the developing planet. The World Bank reports that 80 countries now have water shortages that threaten health and economies. 

Presentations from ACE11 showed many of the problems facing North America's water infrastructure. Some statistics from the conference include: Nearly 30% of U.S. water infrastructure is considered old and is beyond its rated lifetime. Maintaining this old outdated infrastructure is quite expensive. There are about 700 water main breaks per day in the U.S. These breaks cost about $2.6 billion annually to repair. About 42 billion gallons of drinking water are produced and delivered every day in the nation. However, 7 billion gallons or 18% is lost through leakage. In addition, current outdated water systems in the United State's consume 56 billion kWh of electric power annually. Over 10% of this is spent to produce water that is not paid for. 

For investors, the ACE11 conference is just another reason to add water related stocks to a portfolio. The PowerShares Water Resources (NYSE: <a class="ticker" href="/stock/pho#NYSE">PHO</a>) remains the largest pure-play ETF in the sector. However, both the Guggenheim S&amp;P Global Water Index (NYSE: CGW and First Trust ISE Water Index (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>) follow baskets of water related companies that will benefit from this trend.

ACE11 Highlights Issues Facing North America's Water Industry 

When Benzinga's own Kyle Bazzy had the chance to speak with Mark Abssy, the Index &amp; ETF Manager for the <a href="http://www.ise.com/">International Securities Exchange</a>, he knew he was in for a treat. As the first all-electronic options exchange, the ISE transformed options trading into an electronic stratosphere. 

“It's interesting because, up until the explosion of ETFs, everybody was very concerned about what the portfolio managers were doing,” Abssy told Benzinga. “The only way you could do that was, you know, 45 or so many days after a quarter, a mutual fund company would say, ‘Here were the holdings of your fund,' 45 or 60 days ago.”

Abssy was particularly dissatisfied with the lack of transparency into what was going on with these funds. “You know, what ETFs allow you to do at a very high level is truly understand what is in your portfolio,” he said. “The days of buying mutual fund shares, you know, paying a 2.5% load or more, and putting your full faith and trust into the manager to beat that index, pretty much are over for those investors that really are taking charge in what they're doing and what they're investing. ETFs give them the daily transparency. There's really no guessing as to what is in your portfolio or how it's doing.”

An Unlikely Commodity

With regard to the First Trust ISE Water Index Fund (NYSE: <a class="ticker" href="/stock/fiw#NYSE">FIW</a>), Abssy recognizes that water is one of those things that, depending on where you live in the world, it is either at the top of a person's list of concerns or it's something people take for granted because they think it will always be there.

“Here, in this country, over the last decade, there are more and more pockets, communities – regions even – of the country which are feeling the brunt of a lack of water,” Abssy said. “I think more and more people are beginning to realize that water is not this endless resource that comes out of the tap. There truly is a finite amount of drinkable water on this planet. The way that the population growth and demographics are progressing, and the way that industry has been using water and to a large extent polluting water, these things are showing up, and they're showing up in the form of areas and regions in America with water shortages.”

Abssy regards water as a very serious issue. “While it's strange for a lot of us to think of water as a commodity, as something that's investable, of course there are a large number of companies that are involved in this space, and with that the opportunity to invest in them,” he adds.

The Rise of Copper

Abssy spoke briefly about copper and its <a href="http://www.benzinga.com/etfs/commodity-etfs/10/08/448652/what-is-copper-telling-us-jjc-fcx">unusual increase</a> late last year.

“Copper, in the back half of last year, went up 12% or 13%,” Abssy said. “If you look at our index, First Trust ISE Global Copper Index (NYSE: <a class="ticker" href="/stock/cu#NYSE">CU</a>), that fund was up over 30% in that same time period. And a lot of that was because the price of copper not only went up but it kind of broke through some kind of production level. Copper prices had been rising up until August, and the fund was rising too, but there was this point in August where copper just started to take off, and the fund went exponential – it went parabolic as compared to the spot price. People realized hey, now these companies are really making money and it's going to be great in the future.”

The ISEE Sentiment Index Difference

“The ISEE is a sentiment index,” Abssy said. “Unlike kind of a more traditional sentiment indexes, you know, advance/decline line, or buying versus selling, what we've done is look at options activity on equities and we looked at the…basically it's kind of a put call ratio, except what we have done is stripped out certain market participants.

“And what I mean by that is that we have taken out the market maker to market maker trading. We really distilled the put call ratio down to true retail exposure in these names. So, the sentiment index is truly a pure retail gauge – so it really is where the markets are going, not necessarily where market makers have seen opportunities to pick up a penny here or a penny there or something like that. You're really looking at market sentiment in this index.”

Be sure to check out the full audio of the conversation here: <a href="https://s3.amazonaws.com/benzingaradio/Strategies/mark-abssy-061511.mp3">ISE's Abssy talks ETFs investing in copper (CU) and water (FIW)</a>

Subscribe to the new Benzinga Strategies podcast feed in iTunes: <a href="http://itunes.apple.com/us/podcast/benzinga-strategies/id438557022">Benzinga Strategies</a>

Follow us on twitter <a href="http://www.twitter.com/benzingaradio">@benzingaradio</a>, <a href="http://www.twitter.com/Benzinga">@benzinga</a>

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