We know water is the source of life. But it can also be a source for portfolio diversification. Like gold and oil, water is a commodity—and it happens to be rather scarce nowadays. Investors can gain exposure to the commodity through brokers who offer water indexes, mutual funds, and exchange-traded funds. So, as with any other scarcity, the water shortage creates investment opportunities.

Understanding Water Investments

The investment case for water is simple: water is one of the most important resources, and it is likely to become a lot scarcer. About 70% of the earth's surface is covered in water, but over 97% is saltwater. Saltwater cannot be used for drinking, crop irrigation, or most industrial uses. Of the remaining 3% of the world's water resources, only about 1% is readily available for human consumption.

Rapid industrialization and increasing agricultural use have contributed to worldwide 澳洲幸运5官方开奖结果体彩网:water shortages. Areas that have experienced a lack of H₂O include China, Egypt, India, Israel, Pakistan, Mexico, most of Africa, and the United States (Arizona, New Mexico, California, and West Texas), to name but a few.

Pollution also highlights the need for clean water. The dead zone off the Gulf Coast highlights the impact of fertilizer runoff, and methyl tertiary butyl ether (MTBE), an additive in unleaded gasoline, can be found in well water from California to Maryland.

Overseas, highly publicized incidents in Russia, China, and elsewhere demonstrate that pollution isn't limited to the West. Of course, fouled water supplies further restrict the amount of fresh water available for human use.

Water Investment Indexes

Here are someꦓ of the more popular indeౠxes designed to track various water-related investment opportunities:

• The Dow Jones U.S. Water Index is composed of various water-related companies in the U.S.
• The ISE Clean Edge Water Index was launched in December 2000 and represents water distribution, water filtration, flow technology, and other companies specializing in water-related solutions. It contains 36 stocks.
• The S&P 1500 Water Utilities Index is a sub-sector of the Standard & Poor's 1500 Utilities Index that includes water-related companies in the larger index.
• The S&P Global Water Index is an index that began in 2001 and contains 100 companies worldwide; its water-related businesses fall into two areas: water utilities and infrastructure and water equipment and materials.

The MSCI Global Sustainable Water Index provides another look at the water industry from an international perspective. The index focuses on developed and emerging companies that earn at least 50% of their revenue from sustainable water products and services. There are also a variety of utility indexes that include some water stocks.

How to Invest in Water Securities

Firms seeking to profit fཧrom water-related businesses include beverage providers, utilities, water treatment/purification firms, and equipment makers, such as those that provide pumps, valves, and desalination units.

A look at the holdings of any of these water indexes provides an easy way to start looking for suitable investment opportunities. Companies from blue-chip stalwart General Electric to small-cap Layne Christensen are all seeking a piece of the water market. In addition to direct stock purchases, some of the larger firms offer 澳洲幸运5官方开奖结果体彩网:dividend reinvestment plans.

The bottled water market continues to grow. In the U.S., per capita consumption of bottled water in 2023 was 46.4 gallons per capita compared with 31.6 gallons per capita in 2013. According to a 2018 UN study, 177 countries rely on desalination for at least part of their freshwater consumption needs. Companies in these industries can be added to your portfolio to gain water exposure.

If stock picking doesn't interest you, ETFs, mutual funds, and 澳洲幸运5官方开奖结果体彩网:unit investment trusts (UITs) also provide pജlenty of opportunities to invest in 🦹water.

The Invesco Water Resources ETF (PHO) "tracks the performance of U.S. exchange-listed companies that create products designed to conserve and purify water for homes, businesses, and industries." The fund has 40 holdings as of Feb. 28, 2025.

The iShares U.S. Utilities ETF (IDU) provides some exposure to water-related stocks. Other alternatives include the Invesco Global Water Portfolio ETF (PIO), which tracks the Nasdaq OMX Global Water Index, and the First Trust Water ETF (FIW). Benchmarked to the MSCI ACWI Index, the Allianz Global Water Fund invests in improving the supply, quality, and efficiency of water resource management.

The Bottom Line

There is demand for investments that 澳洲幸ꦛ运5官方开奖结果体彩网:profit from theဣ need for fresh, clean water. As this is expected to continue, investors should see a host of new investments that provide exposu⛎re to this precious commodity and to the 𝓰firms that deliver it to the marketplace.

There are currently numerous ways to add water exposure to your portfolio; most simply require a bit of research. Opportunities to invest♏ in this scarce resource are flowing freely.