Tap Into the World’s Most Essential Resource—One ETF at a Time
Water may be the most overlooked asset in your portfolio—but it’s also one of the most essential. As the global population grows, infrastructure ages, and climate patterns shift, demand for clean, accessible water continues to rise. And while water is a basic human right, managing it is big business.
For investors looking for steady growth, defensive positioning, and long-term income, water-focused ETFs offer a simple and effective way to access this growing sector.
In this post, we’ll explore why water investing matters, how ETFs make it easy, and which water-focused ETFs deserve a place in your retirement or long-term portfolio.
Why Water Investing Makes Sense
Water isn’t just a basic need—it’s a strategic asset. Companies that provide the infrastructure, technology, and services needed to treat, deliver, and manage water are vital to modern life.
Here’s why water investments can offer both growth and safety:
- ✅ Global demand is rising: Driven by urban growth, agriculture, and industrial use
- ✅ Aging infrastructure needs upgrades: Especially in developed countries like the U.S.
- ✅ Climate change is intensifying water scarcity: Leading to more investment in water conservation, treatment, and recycling
- ✅ Stable revenues: Many water utilities and service providers have long-term contracts and regulated pricing
- ✅ Defensive characteristics: Like utilities, many water-related stocks are less volatile than tech or cyclical sectors
But instead of picking individual water stocks, many investors prefer the simplicity of water ETFs.
Why Water ETFs Are a Smart Way to Invest
Water ETFs allow you to invest in dozens of companies involved in the water industry—everything from infrastructure builders and equipment makers to filtration specialists and water utilities.
The benefits of using a water ETF include:
- 🔹 Diversification: Spread your investment across the full water ecosystem
- 🔹 Convenience: One investment, automatic rebalancing, no individual stock research
- 🔹 Lower risk: Reduces the impact of a single company underperforming
- 🔹 Accessibility: Most trade like regular stocks and can be held in any brokerage account
- 🔹 Income potential: Many hold dividend-paying water utilities or industrials
Now, let’s dive into the top water ETFs available today.
💧 Top Water ETFs for Growth and Income
Here are five standout water ETFs that provide exposure to the global water industry—all offering a different blend of stability, income, and growth.
1. PHO – Invesco Water Resources ETF
- Assets under management: ~$1.6 billion
- Dividend yield: ~1.3%
- What it does:
PHO tracks U.S.-listed companies that create products to conserve and purify water. This includes filtration equipment, metering systems, and infrastructure technology. - Top holdings include: Danaher, Thermo Fisher, Roper Technologies
- Why it’s appealing:
- Focus on innovation and technology in water
- Tilt toward growth and industrial companies
- Solid long-term performance
If you’re looking for exposure to high-quality U.S. companies innovating in water management, PHO is a strong choice.
2. FIW – First Trust Water ETF
- Assets under management: ~$1.5 billion
- Dividend yield: ~1.2%
- What it does:
FIW tracks 36 of the most efficient and profitable U.S. water companies, based on financial performance. - Top holdings include: American Water Works, Pentair, Xylem
- Why it’s appealing:
- Focus on quality and profitability
- Good mix of utilities, industrials, and tech
- Actively rebalanced for financial health
FIW is ideal if you want exposure to the best-performing water stocks, not just the biggest.
3. CGW – Invesco S&P Global Water Index ETF
- Assets under management: ~$1.3 billion
- Dividend yield: ~1.5%
- What it does:
CGW includes both U.S. and international companies involved in water utilities and infrastructure. - Top holdings include: Veolia (France), American Water Works, Ecolab
- Why it’s appealing:
- Global diversification
- Blend of growth and income
- Exposure to both emerging markets and developed economies
If you believe water is a global story (and it is), CGW provides diversified exposure beyond U.S. borders.
4. PIO – Invesco Global Water ETF
- Assets under management: ~$350 million
- Dividend yield: ~1.4%
- What it does:
PIO invests in 50 global companies that focus on water purification, treatment, and infrastructure. - Top holdings include: A mix of European, Asian, and U.S. companies
- Why it’s appealing:
- Broader international exposure
- Slight tilt toward environmental technologies
- Lower market cap companies for growth potential
PIO is best for investors who want to support sustainable water technology globally—with a potential growth upside.
5. ECLN – Invesco MSCI Green Building ETF (bonus pick)
- Assets under management: Under $100 million
- Dividend yield: Varies
- What it does:
While not a pure water ETF, ECLN includes water-efficient building and infrastructure companies committed to sustainability and conservation. - Why it’s appealing:
- Focuses on green building and smart cities
- Includes water conservation and efficiency solutions
- Aligned with ESG and environmental investing
ECLN can be used as a satellite holding for those interested in sustainable infrastructure, including water systems.
Which ETF is Right for You?
Here’s a quick cheat sheet:
| ETF | Focus | Best For |
|---|---|---|
| PHO | U.S. industrial water tech | Growth investors |
| FIW | Profitable U.S. water companies | Quality-focused investors |
| CGW | Global water utilities and services | Global diversification |
| PIO | Water treatment and purification worldwide | Green tech & smaller companies |
| ECLN | Smart cities and sustainable infrastructure | ESG-focused investors |
For retirees or income-focused investors, combining a global fund like CGW with a utility-heavy core ETF like FIW can provide both stability and dividend income.
Final Thoughts
Water is the most vital resource on Earth—and investing in companies that make it clean, safe, and accessible is both financially smart and socially responsible.
With just one or two ETFs, you can:
- Gain diversified exposure to this essential sector
- Reduce risk compared to picking individual stocks
- Earn steady income from water utilities
- Support innovation in water conservation and treatment
In a world that’s getting thirstier by the day, investing in water just makes sense.
This post is adapted from my book: Liquid Gold: Investing for a Thirsty Future, available now at Amazon.com in paperback and eBook formats. Inside, you’ll find a full breakdown of water investing trends, the best ETFs and stocks to consider, and how to build a water-smart retirement portfolio for the long haul.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, or tax advice. All investments carry risk, and past performance is no guarantee of future results. Please consult a qualified financial advisor before making any investment decisions related to water ETFs or any sector-specific strategy.