Water is the source of life for every living being on this planet. Although about 70% of the earth is covered with water, but 97% of it is saltwater, making it unfit for human use like drinking, farming, etc. And of the remaining 3% of the water resources, only 1% is available for human consumption.
With the rapid growth of industrialization and agriculture, the water levels are going down leading to some countries like Egypt, China, India, the US, etc. facing a shortage of water. Adding to that, pollution is also increasing in water sources as most factories dump their wastes in rivers and oceans making them unfit for human uses.
With the impending water crisis, investors and financial institutions have found the concept of water future trading.
So here are some of the popular indexes which are design to track various water stocks investment opportunities:
- Dow Jones US Water Index: It is composed of nearly 29 water stocks, and it is a barometer that consists of a large number of international and domestic companies that are affiliated with the water business, and those companies have a minimum market capitalization of $150 million.
- ISE-B&S Water Index: It was launched in 2006, and it represents companies related to water distribution, filtration, flow technology, and other water-related solutions. This index contains about 35 water stocks.
- S&P 1500 Water Utilities Index: It is a sub-sector of the S&P Water 1500 Utilities Index and it is composed of only two companies: American States Water (NYSE: AWR) and Aqua America (NYSE: WTR).
- S&P Global Water Index: This index is an 11-year old containing about 50 companies related to water businesses in two areas: utilities & infrastructure, and equipment & materials.
- Bloomberg Water Index & MSCI World Water Index: These indexes provide a look at the water industry from an international perspective and have water stocks. However, currently is it difficult to get information about both the indexes.
How to Invest in Water Stocks
Having a look at any of the above water indexes will provide an easy way to look out for suitable water stocks for investment. In addition to direct stock purchases, some larger firms offer dividend reinvestment plans.
Also, the bottled water market is growing exponentially and the demand is also on the rise. According to the estimates, the American per-capita consumption of bottled water increased by 45%. And about 150 countries rely on desalination for their freshwater consumption needs.
In recent years, there has been a huge increase in demand for investment in water stocks, because of the continuous need for fresh and clean water. So doing a bit of research will enable you to invest in water stocks and gain profits from them. With the increasing opportunities, many companies in the future will try to provide investment opportunities in water stocks.
Also, if investing in water stocks does not interest you, then there are a lot of opportunities like mutual funds, ETFs, and unit investment trusts (like Claymore-Boenning & Scattergood Global Water Equities UIT and the Claymore-Boenning & Scattergood US Water Equities) which help to invest in water.