Water is an indispensable part of our daily lives and is used by a range of industries, from agriculture and food production to consumer staples and industrial operations. Yet, with climate change disrupting water availability and demand outpacing supply, the world faces an impending water crisis. This urgent need for fresh, clean water is driving significant investments in water infrastructure, creating compelling opportunities for investors.

Exchange-traded funds (ETFs) offer an efficient way to invest in the water sector. Funds like First Trust Water ETF (FIW), iShares Global Utilities ETF (JXI), and Tortoise Global Water ESG Fund (TBLU) provide diversified exposure to companies specializing in water utilities, infrastructure, and treatment. These ETFs allow investors to support solutions for water scarcity while mitigating the risks of selecting individual stocks.

With the global water and wastewater treatment market expected to grow from $346.41 billion in 2024 to $617.81 billion by 2032 (exhibiting a CAGR of 7.5%), the potential for growth in this sector is substantial.

Moreover, the need for clean water has never been more urgent. Experts warn that by 2030, the global demand for fresh water could exceed supply by 40%. The sector’s importance cannot be overstated, with around 2 billion people currently lacking access to safe drinking water. As the global water crisis looms, investing in clean water is not just an ethical choice but also a strategic one, positioning investors to benefit from the long-term growth of this vital industry.

With that in mind, let’s look at the fundamentals of the Water Equities ETFs in detail, beginning with the third choice:

ETF #3: Tortoise Global Water ESG Fund (TBLU)

TBLU, launched by Managed Portfolio Series, passively tracks the performance of the Ecofin Global Water ESG Net Total Return Index using a full replication technique. The index includes companies worldwide that operate across the water cycle and are poised to benefit from addressing the global water supply and demand imbalance.

The fund has a total of 42 holdings. Its top holdings include Geberit AG (GEBN) with a 7.31% weighting, Veolia Environnement SA (VIE) at 7.15%, followed by Veralto Corporation (VLTO) and American Water Works Company, Inc. (AWK) with 4.84% and 4.70% weightings, respectively.

IGF’s trailing 12-month dividend of $0.63 yields 1.34% on the current price level, while its four-year average dividend yield is 1.54%. Over the past five years, its dividend payouts have grown at a CAGR of 2.6%.

The fund has an expense ratio of 0.40% compared to the category average of 0.54%. TBLU’s fund inflows over the past six months came in at $174.32 thousand.

TBLU has gained 9.5% over the past year to close the last trading session at $46.70. As of January 03, 2025, TBLU had an AUM of $53.90 million and an NAV of $46.95.

TBLU’s POWR Ratings reflect this promising outlook. It has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

TBLU also has a B grade for Buy & Hold and Peer. Among the 6 ETFs in the Water Equities ETFs group, it is ranked #3. To access all of TBLU’s POWR Ratings, click here.

ETF #2: iShares Global Utilities ETF (JXI)

JXI invests in growth and value stocks of large-cap companies operating across the utility sector and tracks the S&P Global 1200 Utilities Capped Index’s performance using a representative sampling technique.

The fund has approximately $155.34 million AUM. JXI’s major holdings include NextEra Energy, Inc. (NEE) with an 8.68% weighting, Southern Company (SO) at 5.31%, Duke Energy Corporation (DUK), and Iberdrola, S.A. (IBE) at 4.90% and 4.55%, respectively. It has a total of 134 holdings.

The ETF distributes $1.94 in dividends annually, translating to a dividend yield of 3%. Its four-year average dividend yield is 3.14%. JXI has a 0.41% expense ratio, which is below the category average of 0.44%. Its fund inflows were $10.69 million over the past three months and $15.49 million over the past year.

Over the past nine months, JXI has gained 11% to close the last trading session at $64.63. The ETF had an NAV of $64.72 as of January 06, 2025.

JXI’s bright prospects are reflected in its POWR Ratings. The ETF’s overall B rating equates to a Buy in our proprietary rating system.

JXI has an A grade for Peer and a B for Trade and Buy & Hold. The fund is ranked #2 in the same group. Click here to access JXI’s component grades.

ETF #1: First Trust Water ETF (FIW)

FIW offers exposure to the First Trust ISE Water Index Fund, which selects growth and value stocks of companies operating across utilities, water utilities, and wastewater treatment industries. In addition, its tiered equal-weighting scheme boosts the weight of small- and micro-cap companies, reducing concentration.

The fund has a total of 37 holdings. Its top holdings include Waters Corporation (WAT) with a 4.58% weighting, IDEX Corporation (IEX) at 4.27%, followed by Pentair plc (PNR) and Agilent Technologies, Inc. (A) with 4.13% and 4.02% weightings, respectively.

FIW has a 0.53% expense ratio, lower than the 0.54% category average. Its fund inflows were $56.61 million over the past six months and $139.64 million over the past year.

The ETF distributes $0.71 in dividends annually, translating to a yield of 0.70%. Its four-year average dividend yield is 0.57%. Over the past three years, its dividend payouts have grown at a CAGR of 26.1%.

FIW has gained 11% over the past year to close the last trading session at $101.92. As of January 06, 2025, IGF had an AUM of $1.77 billion and an NAV of $101.92.

FIW’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall B grade, equating to a Buy rating in our proprietary rating system.

FIW also has a B rating for Buy & Hold. Of the 6 ETFs in the Water Equities ETFs group, it is ranked first.

Beyond what we stated above, we have also given FIW a grade for Peer and Trade. Get all FIW ratings here.

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FIW shares were trading at $101.59 per share on Tuesday afternoon, down $0.33 (-0.32%). Year-to-date, FIW has declined -0.45%, versus a 0.78% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...

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