Water ETF: Benefit from Investment in Water based ETFs

There is a new concept - ETFs or Exchange Traded funds on varius commodities and stocks and indices - basically on anything that can be traded. So some investment companies have come out with some unique concept of Trading on Water and they have floated their Water Based ETF or Water Exchange Traded Funds.
In this article, we will discuss about how Water ETF work?, How can one invest in Water ETF and whether it is worth investing in Water Based ETFs.
Let's begin with the basics - What is a Water ETF or Water based ETF?
A Water ETF is an exchange-traded fund that invests in companies which are having business in water based segments. Typical examples can be of companies which derive their business profits by operating in water industries like for water treatment, water purification, water utilities, water monitoring, and water distribution, packaged drinking water, water distillers, etc.
So if there is some index which is tracking these sector specific water based companies (examples below), then there can be an ETF of Exchange Traded Fund on Water. These Water ETFs usually invest the money into publicly traded equities based on an underlying index, and float the ETF shares on any exchange for people to trade on them.

Why should someone invest in water ETF
Well, its all about your thoughts and aspirations of the requirements. Water resources are getting depleted day by day, there is need for water everywhere, but the water sources are scarce. Hence, some investment experts are of the opinion that investments in water based stocks or water based ETF or mutual funds will generate good returns.

Isnt there an Ethical side to investment in Water based ETF or companies?
Yes there is. Some individuals are of the opinion that if more water based trading starts happening through water based mutual Funds, water based ETF's , it might lead to manupalation of water prices and there might be a supply-demand gap. Others feel that it is not ethical to invest in such funds or stocks making business out of the very basic necessities of life.
Other feel that there is nothing wrong in such investments and one can actually hedge themselves against scarcity of water by investing in scuh water based financial instruments. Having more and more water resources companies and stocks listed on the exchanges will ensure that there is transpenrancy in prices and proper competition to keep the water prices and demand supply in control.
Overall, it is an individual's call.

What are the available water based ETF?
We cover 3 of the available water based ETF's as follows:



PowerShares Water Resources Portfolio PHO :
The PowerShares Water Resources Portfolio (Fund) is based on the Palisades Water Index™ (Index). The Fund will normally invest at least 90% of its total assets in ADRs and common stocks that comprise the Index. The Index seeks to identify a group of companies that focus on the provision of potable water, the treatment of water, and the technology and services that are directly related to water consumption. The modified equal weighted portfolio is rebalanced and reconstituted quarterly.

PowerShares Global Water Portfolio PIO:
The PowerShares Global Water Portfolio (Fund) is based on the Palisades Global Water Index (Index). The Fund will normally invest at least 90% of its total assets in securities that comprise the Index and ADRs based on the securities in the Index. The Index seeks to identify a group of global companies that focus on the provision of potable water, the treatment of water and the technology and services that are directly related to global water consumption. The modified equal weighted portfolio is rebalanced and reconstituted quarterly.

Claymore S&P Global Water Index (ETF) CGW:
The Claymore S&P Global Water Index, seeks investment results that correspond generally to the performance, before the Fund’s fees and expenses, of an equity index called the S&P Global Water Index (the "Water Index" or "Index"). The Fund is the first U.S.-listed global water ETF. The Fund will normally invest at least 90% of its total assets in common stock and American depositary receipts ("ADRs") based on the securities in the Index. Claymore Advisors, LLC (the "Investment Adviser") seeks a correlation over time of 0.95 or better between the Fund’s performance and the performance of the Index