Investing In Water
Who knew that water could be as valuable as it is. Most of us wake up each morning, take a shower (which consumes gallons of water), brush our teeth (which takes at least a gallon or two) and then go about our day.
The rest of the day consumes plenty of water resources, as well. Washing clothes, our cars, dishes, and even going to the bathroom creates a serious drain on our world’s natural resources. Even though water is a renewable resource, turning dirty water into clean water (and thus making it more valuable) is a very profitable business.
Investing in water might make for an excellent play on the growth of the world’s middle class.
Investing in Water
Few people in the developed world realize how valuable water can be. In the emerging markets, access to water is not just a function of the everyday, but also a very serious luxury. Many millions of people each day go without clean water. Many billions wish their water were more clean.
And so, as more and more people become drivers, mobile phone users, they’re also consuming more water. Water is used in industry to produce goods, of course, but as the world becomes wealthier people consume more of the necessities. Water is one such necessity.
Water shortages are not new. Even in California, a state with a standard of living much higher than the rest of the United States and naturally also the world, water shortages are frequent. Companies have to turn rivers and streams into a product worth consuming. This is the best way to invest in water.
Water ETFs
There are four main water ETFs which provide access to sewage treatment companies, water purification plants, and even companies that supply materials for creating clean water. These ETFs are as follows:
PowerShares Water Resources Portfolio (NYSEArca: PHO)
PowerShares Global Water Portfolio ETF (NYSEArca: PIO)
Guggenheim S&P Global Water Index (NYSEArca: CGW)
First Trust ISE Water Index Fund (NYSEArca: FIW)
Investing in water through these ETFs allows for a pure-play on the water industry, but also growth in the emerging markets, rising water demand, and the reality that even the most plentiful substance in the world is still difficult to clean.
Additionally, with the markets as weak as they are, there is the possibility for multiple expansion, as well. The downside risks are few; what is the risk that the world consumes less water in the future than it does now? And besides, how can life even begin to sustain itself without water? These companies are a necessity to modern life—they’re a pretty sure bet despite debt crises, financial meltdowns, and economic slowdown.
