ETF Talk: Water Offers Untapped Opportunity

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

As we prepare for the summer heat, water presents a significant investment opportunity — especially as states like California and Texas face the droughts associated with an unseasonably warm winter. The PowerShares Water Resource Exchange-Traded Fund (PHO) presents one way to invest in water’s untapped potential. The fund dipped understandably during the winter months, but has begun to rise as the weather gets warmer. The rising price of water is likely to continue through the summer months.


After beginning the year at $17.19, PHO has climbed slowly throughout the year and ended trading yesterday at $18.40. If water prices keep ascending, an investment in PHO would offer a way to profit.

The PowerShares Water Resource Portfolio (PHO) seeks to track the performance of U.S. exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries. The fund is widely invested, and its holdings are divided among the following sectors: Industrials, 57.71%; Utilities, 25.80%; Health Care, 7.71%; Information Technology, 5.77%; and Materials, 3.01%. The fund’s diversity provides a measure of stability, even though PHO’s fate is tied closely to that of water.


PHO’s top five holdings as of May 8, are American Water Works Co Inc (AWK), 8.07%; Waters Corporation (WAT), 7.71%; Flowserve Corporation (FLS), 7.65%; Pall Corporation (PLL), 7.40%; and ITT Corporation (ITT), 7.23%. All five of these holdings are performing reasonably well, year-to-date, and are expected to improve into the summer.

PHO is appealing for several reasons. First, water usage is growing rapidly. The UN reported “water usage has been growing at more than twice the rate of population increase in the last century.” In addition, the fund is widely invested in the water market, having holdings in filtration companies, treatment utilities, and pipe manufacturers.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my ETF Trader service. As always, I am happy to answer your questions about ETFs, so do not hesitate to email me by clicking here. You may see your question answered in a future ETF Talk.

share on:
share on:


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader

Used by financial advisors and individual investors all over the world, is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor

George Gilder

George Gilder is the most knowledgeable man in America when it comes to the future of technology and its impact on our lives.  He’s an established investor, bestselling author, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance.

Product Details

  • Technology Report
  • Technology Report PRO
  • Moonshots
  • Private Reserve
  • Millionaire Circle


DayTradeSPY was founded by head trader Hugh Grossman, a retired internal auditor for a Fortune 500 company. After years of first-hand experience trying out one trading strategy after another, Hugh instead developed his own trading system centered around day trading SPY options. That’s it... Nothing else.

Product Details

  • Trading Room
  • Pick of the Day
  • Inner Circle
  • Online Workshops