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

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
investment thesis behind H20
. 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 PIO
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 PHO 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 FIW 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&P Global Water Index ETF CGW We're not knocking the Guggenheim S&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.

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