This ETF Is Poised to Benefit From an Inevitable Trend: Powershares Water Resource Portfolio (PHO), Companhia de Saneamento Basico (ADR) (SBS), California Water Service Group (CWT)

Page 1 of 2

California Water Service Group (NYSE: CWT)For the sophisticated investor, exchange traded funds are often looked down upon. After all, part of the benefit of taking control of your personal investments is to cut back on as many performance-deflating expenses as possible. Plus, the diversification that ETF creators tout comes with a corresponding negative: both the best and worst companies in a particular industry or index are part of the ETF. So why would an in investor that is knowledgeable enough to handpick stocks ever want to pay annual expenses for a basket of stocks including industry laggards?

The trend behind the ETF is too powerful to ignore

Some investment theses are so universal that every company in the industry stands to benefit. Such is the case with water — nothing is as essential to the basics of human life, and the statistics around water scarcity are quite clear. Currently, a billion people do not have sufficient access to fresh water. This alarming statistic is projected to compound both as populations continue to swell and developing countries continue to increase the use of water for agriculture and industry. Based on a World Water Assessment Programme study, 70% of fresh water usage goes towards irrigation, while another 22% is consumed by industry. Only the remaining 8% of fresh water being used is for domestic use.

This isn’t intended to be a public service announcement or political statement. Instead, these facts point strongly towards a water shortage that will cause water to live up to the nickname “blue gold” that has been increasingly used in recent years. Quite simply, the necessity of water and a convergence of several inevitable trends will make fresh water a more valuable and strategic resource in the future than most consider it to be today.

How to invest in the coming water shortage

There are a number of different approaches to investing in water-related businesses. The most obvious is an investment in utilities that provide water to consumers and businesses. For investors more focused on steady performance and income, California Water Service Group (NYSE:CWT) provides growing returns in a regulated environment. Layering on emerging market growth to the water utility investment thesis, Companhia de Saneamento Basico do Estado de Sao Paulo (ADR) (NYSE:SBS) has outperformed the market in recent years as population and industry growth in Brazil has driven an ever-increasing need for water.

If the standard water utility is too boring, investors looking to think outside the box might consider Consolidated Water Co. Ltd. (NASDAQ:CWCO), a Cayman Islands-based water utility that is a leader in developing desalination technology. Desalination converts salt water into fresh water, which potentially opens a huge opportunity to meet growing fresh water needs with the ample water found in oceans across the world.

In addition to the provision of water, companies that make the infrastructure that moves water and improves efficiency are also worth a look. For example, pump manufacturer Flowserve and smart meter provider Itron, Inc. (NASDAQ:ITRI) address the growing need to transport water, track consumption, and improve efficiency.

Not sure which investment is best? Try them all!

Each of the five companies mentioned above stand to benefit from the growing demand for, and scarcity of, fresh water. Perhaps one jumps out as the clear long-term winner. If the decision isn’t so clear, it makes a lot of sense to consider Powershares Water Resource Portfolio (NYSEMKT: PHO). Powershares Water Resource Portfolio (NYSEMKT:PHO) is an ETF devoted to tracking the NASDAQ OMX US Water Index. Among its 37 holdings, SBS and Flowserve are the two largest holdings.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!