"While global climate change may be over-politicized, there's no disputing that the issue is real," says Larry Edelson. In his Real Wealth, he looks at two favorite exchange-traded funds that invest in the water sector.
He explains, "Food shortages and the lack of fresh drinking water are likely the most acute and immediate problems. For example, Northwestern India is running out of water, China is raising water prices to curb use and Mexico recently restricted the water supply amid a shortage.
"Domestically, unbridled use of groundwater in Arizona is a potential disaster. The problem is pipelines and canals don't extend far enough to deliver water to everyone. And unrestrained drilling in outlying areas is draining the supply.
"One of the best ways to play the water scarcity angle of global climate change and population explosion is through the PowerShares Water Resources Portfolio (NYSE: PHO).
"This fund tracks companies that are involved in the delivery and treatment of potable water. Since my initial recommendation in January, the price of PHO has climbed a solid 26%. And there's plenty of upside potential packed into these shares.
"I also now recommend buying Claymore S&P Global Water ETF (NYSE: CGW), which tracks the performance of the S&P Global Water Index, which is made up of major players in water treatment and delivery systems.
"Besides being well-diversified in various aspects of the water industry, CGW is also diversified in companies based in the United States, the UK, France, Japan, and Switzerland. Another plus: This ETF pays out an annual dividend that currently has a 12-month yield of 7.82%."
Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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