Water scarcity is considered one of the greatest problems people face on the globe. There is increasing competition for water, as supply is low and demand is high. Water has no substitute, and less than one percent of today’s supply is safe for consumption. Given a fast-growing world population and an increase in droughts in several countries, water is becoming harder to access—thus more and more valuable. Even in the United States, we suffer droughts and an aging water infrastructure. Water security offers a significant investment opportunity that can make a difference in the world.
Within the expansive water universe, there exists infrastructure, technology, utilities, materials, and healthcare companies. Companies in the water industry have historically offered competitive returns. Individuals that invest in water companies can help upgrade and build water infrastructure across the globe.
Companies in the Water Industry
Companies in the water industry contribute to society and the environment with the help of their stockholders. To offer an example: one company works with manufacturers to minimize the amount of drinking water used in their manufacturing plants through efficiency and recycling. Another company is transforming the world’s aging pipeline infrastructure, starting in San Francisco—60 percent of this city’s pipes are over 80 years old and need replaced and upgraded. Other companies in this industry assist small farmers in rural areas to irrigate their land more efficiently.
How to Invest in Water Security
One way to get water exposure in your portfolio is through a fund. Traditional mutual funds that focus on water companies are an easy way to start, as some have low initial investments and immediately provide a diversified portfolio in this industry. There are also exchange traded funds (ETFs) that invest in companies in the water industry. ETFs are another way to get a diversified portfolio of water stocks and have relatively low costs.
Investing in water companies not only produces positive effects on the well-being of communities and fosters global development, but it can also be a key investment holding in a well diversified portfolio.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.
Investment advisory services offered through Sikich Financial, an SEC registered investment advisor.
About the Author
Julie Krehbiel, CFP®
Julie Krehbiel provides financial planning and wealth management services to individual, corporate and not-for-profit clients for Sikich Financial. As a Certified Financial Planner, she specializes in matching clients values with their investments.