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Take The Plunge Now: How To Invest In Water

Last Updated on March 19, 2022 by Mr. FightToFIRE

We use it every day for drinking, washing, rinsing, showering, etc. Much of it is for food and other goods, some of which require it in vast quantities. In short, we cannot do without it. I’m talking about water! But how do you invest in it, and is it even worth your money?

I talked about investing in specific trackers when covering 5 thematic funds for the future. I now want to go deeper into my top pick: water.

Besides, private households, agriculture and industry depend on having access to clean (drinking) water. However, clean water isn’t guaranteed around the globe.

Why don’t we have a closer look at this scarcity and, based on that, see if water is something you should invest in it, and if so, how? The focus is on some of the best water ETFs and global investment funds for water less on individual stocks.

Water: a scarce commodity

Water is vital. We cannot imagine life without it. After all, clean drinking water comes out when we turn on the tap in the western world. This simple fact makes the availability (and quality) of water critical.

How scarce is water?

There is only a limited amount of fresh water on our planet: about 2.5% of the total water surface.

All the water in the world
If you put all the water in the world into a sphere, it would look like the image about. Do you understand why fresh water is important? Lets find out how we can invest in the bllue gold.

In Belgium, we have free access to potable water, but we are also increasingly feeling the effect of periods of extreme drought. The rapidly growing population, the economic catch-up of emerging countries, and global warming create additional challenges that contribute to water scarcity.

According to the UN World Water Report, over 2.2 billion people worldwide don’t have permanent access to clean water.

A third of them (750 million) don’t have an essential drinking water supply. And this number is exploding due to climate change, humans’ quest for economic growth & prosperity, and an ever-increasing world population. Many reasons these figures will at least double by 2050. The UN estimates that around 5 billion people will live in arid regions and face water scarcity problems.

World water footprint
The amount of fresh water used in the world.

Why is water becoming increasingly scarce?

The main reasons are climate change and reduced rainfall or changing rainfall patterns, drought, and increased evaporation. However, besides the climate-related causes of water scarcity, the human factor is perhaps the largest one.

The largest water consumer is the agricultural sector (incl. livestock). It accounts for around 70% of global water consumption. The biggest problem within agriculture is that a large part of the water is lost after use and is not collected for recycling.

Inefficient irrigation methods, inadequate technical equipment, and a lack of awareness of this global problem in some places mean that farmers waste enormous amounts of water or are using it inefficiently. In contrast to the climate-related causes of water shortages, these are comparatively easy to remedy by investing in water technology and know-how.

Household & industry usages keep rising

In addition, water is also used for industrial applications and households. Today, we see that many companies are looking for more efficient ways to manage water. In principle, there are already many technological possibilities, but the cost price is still a barrier for many companies.

We see that more and more companies are taking steps in the right direction. Technological evolutions are making it increasingly cheaper. On the one hand, this is due to the increasing social importance. On the other hand, to the ever-stricter standards for industrial and drinking water. So companies are obliged to evolve along with it.

Wasting water is a global phenomenon

It is not only in peripheral regions of the world that people waste scarce water; Even well-developed economies such as the USA or Great Britain waste vast amounts of unused water. For example, in England and Wales, around 20% of their drinking water consumed seeps into the ground through dilapidated pipes.

According to the American Society of Civil Engineers, as much as 40% of water pipes are in poor condition in the USA. Many countries, including some in Europe, are failing to invest in water, such as building modern pipelines and infrastructure.

Growing awareness of a global problem

Water is becoming scarcer every day. under-investment by states intensified these changes further pushed by a more prosperous lifestyle, notably in the Western world. At the same time, the population in developed countries with a higher level of education is noticing this problem too.

The principle of sustainability should not only be applied to CO² emissions, but also to the water industry. Several countries and private individuals also recognize this. Water is becoming more and more important as a scarce commodity. This is also attracting companies’ and investors’ attention. The number of money companies invest in water is growing rapidly.

How to invest in water? Here are some concrete investment opportunities for 2022

Water as a commodity is in great demand. However, I have found that water as a theme gets less attention when discussing sustainability and ethical investing than, for example, CO2 emissions or even guns. Although the water footprint is incorporated in sustainability ratings for companies, the theme still seems to be relatively underexposed. Unjust as we are all impacted by it daily, and without it, we cannot live.

Water producers

But this raises the question: how can you make an informed investment decision in this blue gold?

We will first look at the water industry with all its sub-areas of the water cycle. These companies develop solutions for water applications such as water supply, water purification, leak detection, and quality measurements.

From pump to water recycling

In concrete terms, they are manufacturers of pumps, pipes, filters, irrigation equipment, and measuring and leak detection equipment. In addition, some companies provide water infrastructure, water recycling, and desalination using filter stations and chemical processes. They play a vital role in the challenges water faces by developing and improving techniques and products.

Besides extracting water, the treatment, supply, and the latest technologies for electricity generation are important value drivers for the industry. Wastewater disposal, treatment, and recycling are also exciting areas of water management. But also special plants for desalination of seawater and power plants for electricity generation are promising future fields in which investing in water could be worthwhile.

Water and durability

Every drop of water must be used sensibly. Collecting and reusing water is crucial for a sustainable approach to the economy and the environment. It is better to monitor water in a circular process so that it is filtered and reused. In doing so, the water retains its full utility value.


There is a lot to gain from saving and collecting freshwater. On a domestic level, this includes toilets, showers, and taps. Also for industrial applications and within agriculture, many improvements are feasible. For example, there are already profitable initiatives in which the organic material of wastewater is reused as a fertilizer in agriculture or as a fuel for all kinds of applications. There is also a massive focus on vertical farming, where crops are grown vertically and with much less soil, water, and energy needs.

Water production - investing in water technology

Bottled water production

First, I should mention water extraction. Because of the scarcity of water, many companies are focusing on alternative water extraction methods on top of traditional forms of obtaining water.

For example, seawater desalination is a model with a promising future. E.g., in the Arab world, more and more such desalination plants are operating in coastal areas. They are taking ‘Fresh’ paths towards a better future. Salt water is the source here, unlike the usual extraction of freshwater sources. Considering 97% of the earth’s total water resources are saltwater from oceans, which many considered unusable, these projects show there is a future in these methods of seawater desalination.

The US company Xylem Inc. or their French competitors Veolia Environment S.A. are worth mentioning here. The former is also the only public company traded on the stock exchange, specializing in water and global presence.

Water treatment – a value driver for water industry

Water treatment plant

This is because, besides supplying water through seawater desalination plants, the Group also operates in water processing with the sale of special pumps and systems for the treatment and purification of water. This area is also technologically advanced and innovative and is of growing importance for increasing water pollution. Market-leading companies in this sector are, for example, the Danaher Corp. group, which trades on the US stock exchange, or the German companies KSB SE & Co. KgaA and GELSENWASSER AG. Investing in water utilities seems to be a promising opportunity.

Wastewater - waste management & recycling

Waste water management

Another factor in water management is the processing and disposal of wastewater. The disposal of polluted water or “recycling”, i.e. cleaning for reuse, especially in the industrial sector, has developed into one of the core areas of the water industry. Industrial wastewater can often be processed so much that it can reuse industrially. Many companies are therefore investing in water technology to secure a share of this growing market for wastewater treatment.

This enables companies to use their water resources more efficiently and polishes up their water footprint, which is growing in importance. Companies such as Hyflux Ltd. or the Korean group LG Chem are worth mentioning here.

Excellent Water ETFs and Funds to look into

Next to private investment in the already mentioned market-leading water companies of the different parts of the industry, investing in water funds and some of the best water ETFs seems to be an excellent opportunity.

There is also the option of investing in water in a more sustainable way, too. Here is a selection of some of the best water ETFs and promising global investment funds for water.

Active fund management

1. Pictet Water Fund

The Pictet Water Fund is the oldest and, with an investment volume of around 4.4 billion, the largest global investment fund for water. Compared with the global market index MSCI, it is similarly solid and has consistently outperformed, especially in times of crisis. The focus of this actively managed fund is the water supply, probably the most constant sector in the industry.

However, many companies focusing on the promising technology of the water cycle are also represented. The Pictet Water Fund appears to be a suitable investment in water for investors seeking long-term growth in their returns.

2. RobecoSAM Sustainable Water Fund

For sustainability-conscious investors, RobecoSAM Sustainable Water is an excellent option for environmentally responsible water investment. Focusing on wastewater treatment, water analysis, and infrastructure, this fund is also global.

It is in line with the modern trend towards sustainability and focuses on responsible, modern water management companies. This global investment fund for water is also acting worldwide in various areas of the industry, which makes it well diversified.

Passive funds / trackers

1. Lyxor World Water UCITS ETF–Dist

With around €675 million under management, this water ETF specialises in companies that generate at least 40% of their business income in the water industry. Its focus is on water infrastructure, supply and treatment.

The ETF contains the world’s 20 largest companies in the fields of water and hydropower, with each company having a maximum weight of 10%. Investing in water technology is an important factor here. Modern technologies in water disinfection, purification and desalination have a pronounced presence.

A downside to this specialized ETF is the higher TER of 0.60%.

2. iShares Global Water ETF

With a capital volume of well over €1 billion, the iShares Global Water ETF is one of the largest and best water ETFs worldwide. More than 46% of the total share, originates from water supply companies. This passively managed ETF aims to provide liquid exposure to leading listed companies from both developed and less developed countries related to the water industry. It operates globally and is strongly aligned with the S&P Global Water Index as its benchmark. The issuer is none other than Blackrock Asset Management.

Just like the other water ETFs, the expense ratio is on the higher end of the spectrum at 0.65% p.a.

I'm a developer for a major financial institution in Belgium that is present in over 40 countries. I have over 8 years of working experience in the development of customer applications focussing on all aspects of banking. This helped me gain a deep understanding of the inner workings of a commercial bank. All of this experience in both banking and life culminates in this blog about personal finance and my fight towards FIRE.

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Thanks for the overview and the suggestions. Are you aware of the existence of the L&G Clean Water ETF (IE00BK5BC891)? It tracks the Solactive Clean Water Index, currently consisting of 66 companies, at a TER of 0.45%?
What are your thoughts on the Water commodity future? And on possible geopolitical risk for further growth?

Kind regards and all the best for 2021

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