Best Water ETFs for Q1 2020

Water is one of the planet’s most coveted and widely used resources. Like other commodities, such as oil and gold, water assets can add significant diversification to any portfolio. One of the best ways to gain exposure to the water industry is through a water exchange-traded-fund (ETF). Such ETFs invest in companies involved in the treatment and purification of water, as well as its distribution. Some notable names in the industry include German-based BASF SE, 3M Co. (MMM), and ITT Inc. (ITT). As an essential commodity, water ETFs are often used as a defensive position in a portfolio. To the extent that future water scarcity becomes a growing threat, these ETFs could be a significant offensive play as well.

Compared to other types of ETFs, the water ETF universe is small, comprised of about just five different funds, excluding leveraged and inverse ETFs. The best-performing water ETF for Q1 2020, based on performance over the past year, is the Tortoise Water Fund (TBLU). We examine the top 3 best water ETFs below. All numbers in this story are as of February 9, 2020.

• Performance over 1-Year: 32.1%
• Expense Ratio: 0.40%
• Annual Dividend Yield: 1.52%
• 3-Month Average Daily Volume: 3,549
• Assets Under Management: $18.1 million
• Inception Date: February 15, 2017
• Issuing Company: Tortoise Capital

TBLU is a multi-cap ETF that invests in small-, mid-, and large-cap water stocks in developed markets around the world. The fund also follows a blended strategy, investing in a mix of value and growth stocks. As of February 9, 2020, the TBLU ETF’s top three holdings include Veolia Environnement S.A. (VIE), a French-based utility company, American Water Works Company Inc. (AWK), a utility company, and Xylem Inc. (XYL), a water-technology company.

• Performance over 1-Year: 29.4%
• Expense Ratio: 0.55%
• Annual Dividend Yield: 0.53%
• 3-Month Average Daily Volume: 34,092
• Assets Under Management: $578.8 million
• Inception Date: May 11, 2007
• Issuing Company: First Trust

FIW is a multi-cap ETF that invests in U.S. equities of varying market capitalizations and is primarily focused on growth stocks in the water industry. As of February 9, 2020, the fund’s top three holdings include Essential Utilities Inc. (WTRG), a water and wastewater utility company formerly known as Aqua America Inc., Agilent Technologies Inc. (A), a research, development, and manufacturing company, and AECOM (ACM), a multinational engineering firm.

• Performance over 1-Year: 28.7%
• Expense Ratio: 0.62%
• Annual Dividend Yield: 1.42%
• 3-Month Average Daily Volume: 75,317
• Assets Under Management: $750.8 million
• Inception Date: May 14, 2007
• Issuing Company: Invesco

CGW is a multi-cap ETF that invests in water equities of varying market capitalizations in developed markets across the world. The fund follows a blended strategy, investing in value and growth stocks. As of February 9, 2020, the ETF’s top three holdings include American Water Works Company Inc. (AWK), Xylem Inc. (XYL), and Veolia Environnement S.A (VIE).