These platforms give you access to professional tools to improve your trading strategy. For instance, set the price range for stocks below $5 to show you the best penny stocks. As of the end of the third quarter, 14 hedge funds tracked by Insider Monkey held stakes in California Water Service.
Lack of water will contribute to other challenges, such as affecting the food supply, increasing severe droughts and declining water security. A growing spotlight on water sustainability, then, is also shining brightly on water investing. If you’re interested in starting to invest in water, read on as we highlight five mutual funds and exchange-traded funds (ETFs) that focus on this theme. As the U.S. population grows and people move around, demand for water ebbs and flows.
There are a couple of great reasons to explain why investing in water makes sense. Our blue planet is full of water as around 70% of the earth’s surface is covered with it. But you might be wondering why would anyone invest in something as abandoned as water. Our goal at FinMasters is to make every aspect of your financial life easier.
If you’re using a robo-advisor, you’ll answer questions about your risk tolerance and goals, and the company will invest your money accordingly. An ETF may be made up of dozens or even hundreds of different investment types, diversifying your portfolio. Beverage companies like PepsiCo, Inc (PEP) offer brands of bottled water for public consumption, such as Aquafina.
Water Stocks Have to Undergo Stern Environmental Regulations
If you’re looking to invest in water stocks, keep reading to learn about seven of the best water stocks you can buy today. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. With concerns over water scarcity in some regions of the world, the popularity of water as a commodity is gaining traction. There are several ways investors can invest in water to gain exposure to this commodity within their investment portfolio. Water stocks are often seen to belong within the ‘defensive’ sector, meaning that there is a consistent supply and demand all year round for these types of services and products.
- California is a big state, and California Water Service provides wastewater services to many of its residents.
- The fragmented nature of the industry is what allows for investment opportunities.
- A dividend with a five-year annualized growth rate of more than 11% adds to its appeal.
- From a sustainability perspective, investments in water contribute to resource security and basic needs, two key impact themes identified by Morningstar Sustainalytics.
Once stormwater hits its drains, its filters remove contaminants, its pipes direct the water away from streets, stores and homes, and its water-cleaning processes return clean water back into waterways. This lends even more importance to the need for industry solutions. Given the size and scope of the challenge that the world faces, this megatrend could play out for decades. If you think that addressing the water crisis aligns with your investing objectives, there are more ways than ever to ride the wave. Water-themed investments fall under the larger sustainable investing approach, which is based on environmental, social, and governance (ESG) factors.
You have access to water whenever you turn on the tap, so it can be difficult to think of water as a sound investment. Inflation eats savings and only through investing it is possible to save or increase the value of your funds. However, choosing where and how much to invest is the more difficult question. The first thing to determine is whether you’re a long-term investor or a short-term speculator. Long-term investors base their decisions on mostly fundamentals, while short-term speculators mostly use technical analysis. Coca-cola, Starbucks, Heineken, PepsiCo, and Carlsberg are just some of these beverage companies that are publicly traded.
Water Index Funds and ETFs
2,000 years ago the ancient Romans built aqueducts to transport water from higher elevations to lower elevations. Aqueducts – combined with pipelines and pumping systems – are still used today in some geographies, including California, Australia, and Libya. In any case, the barriers to entry here mean buying water rights just doesn’t make sense for the average investor. T. Boone Pickens owns more water rights than anyone else in the United States. In 2011, while Texas was suffering through one of the worst droughts in more than 50 years, Pickens was trying to sell his rights to the Ogallala Acquifer (one of the world’s largest) to the Dallas-Fort Worth area.
The York Water Company (NASDAQ:YORW)
That means no Danaher or Waters, although the fund holds Ecolab, taking a more expansive view of Ecolab’s water revenue than Morningstar Sustainalytics. The fund also has a sustainability screen, requiring holdings to have Sustainalytics ESG Risk Ratings of Medium or lower. The fund has been around for more than five years but has an asset base of only $56 million. While it has persisted avatrade review for that long with a small asset base, this raises at least a caution flag as small funds carry a risk of shutting down. Water companies are already investing to meet the demand and needs of the future. American Water Works announced in its 2017 annual report that it has a three-year technology and innovation plan to use artificial intelligence to better serve its customers.
As water scarcity intensifies, the demand for innovative solutions and sustainable water management practices will only increase. By review market wizards seriess, ETFs, and supporting water-related projects, investors can contribute to a more water-secure future while potentially enjoying attractive returns on their investments. Although the market offers a variety of water utility stocks from all over the world, investing in drinking water stocks should be thoroughly evaluated. Water companies are subject by nature to times of financial debt and, therefore, interest rates should also be carefully assessed. It is preferable to invest in companies that demonstrate a higher level of stability.
Investing in Water May Be Appealing, but Fund Investors Have Few Compelling Choices
Investors should take a few minutes to consider investing in water stocks. The water industry is poised for significant growth, driven by increasing demand for clean water, wastewater treatment, and water infrastructure development. By investing in water stocks, investors can capitalize on the growing market and potentially earn attractive returns on their investment.
Investment management company Invesco (IVZ -1.13%) dominates the water ETF market, and the Water Resources fund is its largest offering. Based on the NASDAQ U.S. Water Index, the fund seeks to track the performance of companies in the business of purifying, delivering, and conserving roboforex review water for homes, businesses, and industries. It is not limited to companies that are doing business in the U.S., but it is heavily focused on stocks that trade on U.S. markets. A market with nearly unlimited demand and only limited supplies can make for an intriguing investment.
In 2020, water became a new commodity traded on Wall Street alongside oil, gold, and other resources through futures contracts. Every year, it’s estimated that 6 tons of water are wasted through leaking pipes and poor infrastructure. Recently, the water system in the U.S. was given a D+ grade by the American Society of Civil Engineers (ASCE). The ASCE has speculated that the U.S. government must spend close to $4.5 trillion to fix the degrading water infrastructure. Online brokers can help you find and trade stocks at the click of a button.