Water ETFs – FXR, FIW, PHO, PIO, CGW

If you could go back 5 years and pick one stock to buy, a good choice would have been Flowserve (NYSE: FLS).

The $7 billion manufacturer of pumps, valves and seals is an institutional favorite with steady growth in revenue, earnings and cash flow and is strategically positioned to benefit from the world’s increasing demand for water.

However, a recent positive earnings report and increase in earnings guidance has the stock trading near an all time high.


To participate in Flowserve’s momentum while diversifying single stock risk, investors can use a water ETF.

The two ETFs with the most exposure to Flowserve are both from First Trust Advisors. Flowserve makes up 4.7% of the assets of the ISE Water Index Fund (NYSEArca: FIW) and 3.5% of the assets of the First Trust Industrials/Producer Durables AlphaDEX Fund (Amex: FXR).

FIW tracks a modified market-cap weighted index of 37 companies that derive a substantial portion of their revenues from the potable and wastewater industry. FXR is a fundamentally weighted index of 53 companies in the industrials and producer durables sector of the Russell 1000.

Note that FXR has under $10 million of assets and is very lightly traded. As a result, closely watch bid-ask spreads and tracking error when trading.

For more information on FIW and FXR, see the First Trust website.

Other Water ETFs that aren’t as focused on Flowserve include two from PowerSharesWater Resources (Amex: PHO) and Global Water (Amex: PIO) and one from ClaymoreS&P Global Water Index (Amex: CGW). For more information, see the PowerShares website and Claymore website.

Also, see our earlier post Thirsting for a Water ETF .

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