One of the most valuable commodities in the world is water -- without it, mankind can't survive. While more than 70% of the Earth's surface is covered by water, but 97% of it is saltwater and only 1% of the remaining 3% is readily available for consumption. Water is becoming scarce, and upcoming water shortages are emerging as the population of the world increases, particularly in emerging markets like China, India, and Mexico.
A great way to include water as part of your portfolio's commodity allocation is by buying an exchange-traded fund (ETF). An ETF is a basket of stocks that allow you to invest in a single asset class, sector, country, or theme with one stock. In one ETF, you'll own not only water utility companies but also related businesses, like those that help build the infrastructure for making water suitable for drinking. You won't have to pick a single stock, rather you can own the most important stocks in the water industry -- worldwide. ETFs are perfect building blocks for building a diversified portfolio using an asset allocation strategy.
There are several water ETFs, but the best one is PowerShares Water Resources Fund (NYSE: PHO) which is a mix of 30 water stocks from all over the world. This ETF fund costs you only 0.64% to track the total return and performance of the Palisades Water index and gives you a great way to invest in the water industry. Below is a list of the top stocks you'll own with PHO:
- Valmont Industries Inc. (NYSE: VMI): 5.5%
- Veolia Environnement (NYSE: VE): 5.1%
- Tetra Tech Inc. (NASDAQ: TTEK): 5.0%
- Flowserve Corp. (NYSE: FLS): 4.7%
- AECOM Technology Corp. (NYSE: ACM): 4.5%
- Ameron International Corp. (NYSE: AMN): 4.3%
- URS Corp. (NYSE: URS): 4.2%
- Itron Inc. (NYSE: ITRI): 4.0%
- Watts Water Technologies Inc. (NYSE: WTS): 4.0%
- Danaher Corp. (NYSE: DHR): 4.0%
Mitch Tuchman is the CEO of MarketRiders, offering online software that makes it easy to build and manage an ETF portfolio using asset allocation strategies.
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