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How To Invest In Water Infrastructure Projects

The Keokuk Water Plant In Iowa.

Why Should You Invest In Water?

If you are serious about having an investment portfolio in tune with a changing world, you should learn about the growing demand for water. Investing in water may be one of the most profitable things you can do with your money in the coming years.

There are two big things going for the water industry. The first is a growing demand and shortage of potable water. Cities, especially in the southern and western part of the United States will be forced to build new treatment plants including desalinization or seawater conversion plants in order to keep up with the need for water. Megaprojects, such as dams and dam repair are also part of the mix.

The second is how the industry will reap benefits from Federal economic stimulus spending.


Educate Yourself About Opportunities In Water Infrastructure

Learn about the sectors of the water industry that will be affected by the stimulus package. The main thing that will affect the water industry will be Barak Obama's ambitious plan to revive the economy by investing in infrastructure. A big part of infrastructure spending will be new water plants and systems. These include municipal water supplies, rural water supply systems, treatment plants, replacing old pipes and more. It is hard to pick one stock that covers the water industry as a whole.

A “Multi - Fauceted” Industry

The water industry or water sector includes everything from companies that make plastic and metal pipes to companies that make water meters such as the Badger Meter Corporation.  The water sector also includes companies that make high tech desalinization equipment and also local water companies that operate water systems for a profit.
You can buy individual stocks of companies such as Culligan or Badger Meter but a much better way is to buy a sector ETF. An ETF is an Exchange Traded Fund. These are traded on the stock exchange just like a stock but are composed of many companies like a mutual fund. They are actually more like an index fund which is not actively managed but made up of the biggest companies in the industry.

 There may be a small amount of fund management actions that take place throughout the year, such as selling companies that have low earnings, but not nearly as much as an actively managed mutual fund..

Invest In Water ETF’s For Infrastructure Earnings

For good exposure to the water sector as a whole, try ETF's. The two biggest water ETF's are from Invesco Powershares. Their symbols are PHO and PIO. The fund PHO invests primarily in US based companies and carries less risk in terms of share price swings. The fund PIO invests in about 25% US funds and the rest overseas in developed and developing markets.  It offers potentially higher returns but more risk.

Another good water ETF is The Claymore S&P Global Water ETF Exchange Traded Fund. Listed on the Toronto stock exchange as ticker symbol CWW, the Claymore ETF mirrors the S&P Global Water Index and also appears on the American Stock Exchange under symbol CGW.
Many leading analysts believe that due to growing shortages water will be the new oil. These water related funds are a great way to invest in water infrastructure and profit from the growing water shortage in the U.S. and around the world.
 

This advice is not a substitute for advice from an investment professional and is not an endorsement of any particular fund. You should always consult a licensed broker before investing and read the prospectus and other information.
 

Cheers.