As natural resources go, oil tends to get more attention from investors than clean drinking water, even against the backdrop of headline-grabbing shortages in Flint, Michigan, South Africa and elsewhere.
But a few funds are showing that investing in utilities and water infrastructure and technology companies can pay off, especially for long-term investors looking to diversify their portfolio.
Each holds shares in U.S. water utilities, such as American Water Works, infrastructure companies like Aegion Corp. and technology companies like Xylem, a supplier of energy-saving pumps and controls for hot water systems.
The three ETFs are all up around 15 percent over the past 12 months.
The idea being that as demand for water grows along with the population, so will the need for new infrastructure and upkeep on water systems.
The Swell Clean Water portfolio is managed and investors own shares in the companies and can remove stocks from the portfolio.
It’s up 11 percent over the past 12 months.
For investors considering water-focused funds, it’s best to think of them as a long-term, diversification play.
“As such, the ETFs have less defensive characteristics than traditional utilities ETFs,” Rosenbluth said.
“We think there is investment merit from a diversification perspective other than from an impact investing one.” Copyright © 2018 The Associated Press.