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Water as the Next Great Investment Idea: Stocks and ETFs - 2012

By Edited Apr 15, 2016 2 2

Perhaps water is the great investment of the 21st century. Do water company stocks belong in your portfolio?

Do you have gold in your portfolio? How about oil or perhaps silver, copper, or wheat? If you have a self-directed investment plan you know the answers to these questions. If you have a deferred compensation retirement plan like a 457, 401k, 403b, or work pension plan, the managers of your underlying mutual funds might have invested in these commodities. Or perhaps they have been investing, on your behalf, in companies that benefit from the increasing demand in these areas like Exxon Mobil (XOM), Conoco Phillips (COP), John Deere (DE), Potash (POT), Freeport-McMoRan (FCX), or Archer Daniels Midland (ADM) and others. But what about the needs and demands for clean water in the 21st century? Will water, water companies, and water stocks be the next major investment idea?

As the developing world increases their demand for clean water for their citizenry and water for industrial

use, will water be the next critical commodity? Clean drinkable water is something that many take for granted, and that many see as a free and endless resource. But as recent droughts and toxic spills have shown us, clean water can be a scarce and important asset. If you believe that water will become more valuable in the 21st century, or even a contested rights issue in some parts of the world, then perhaps this is a viable investment idea for a portion of your speculative portfolio.


At present, there are a number of companies in the water investment space. Some are involved in delivery and distribution, as utility companies, and others in purification, transmission (pipes, shipping, and delivery), desalination, and other new filtration technologies related to creating potable water from undrinkable sources. These companies include American Water Works (AWK), Aqua America (WTR), Valmont Industries (VMI), Watts Water Technologies (WTS), Flowserve Corporation (FLS), Tetra Tech (TTEK), Badger Meter (BMI), Nalco Holding Co. (NLC), and others. Even General Electric (GE) has Power and Water: Water and Process Technologies inside its GE Energy division.


There are also a few ETFs (exchange traded funds) for water that serve as an investment "basket" to provide exposure to a number of water-related companies. These include PowerShares Water Resources (PHO), the Claymore S&P Global Water Index (CGW), First Trust ISE Water Index Fund (FIW), PowerShares Global Water (PIO), and others. The question is whether or not investment in water and water-related companies is a trend that will be worth your long-term investment dollar?


Always take investment ideas that you hear or read about as an invitation to then begin your own research. Never purchase a stock, fund, or ETF based on someone else's recommendation; this is a great way to stay out of trouble, and to avoid owning an investment that you don't fully understand. Remember to always consult with your advisors and other investment professionals before you commit any risk capital.



Aug 7, 2011 1:33am
This sounds like a good suggestion. People complain about the price of fuel and electricity. Yet they quite often pay $3 a litre for water and say nothing. Where is the logic. And to make it worse so many more people are conscious of the need to drink more water and pay so much for it.
Aug 7, 2011 7:15am
Thanks Eileen!
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