ETFs and the Coming Water Crisis

While some still argue that it is a purely political issue, water scarcity is a pure numbers game. Although over 70% of the globe is covered by water, only 3% of it is suitable for human consumption. However, with a growing population and increasing industrialization leading to higher levels of pollution and consumption, the threat of scarcity remains a hot issue.

The Claymore S&P Global Water Index ETF (CGW - commentary - Trade Now) and PowerShares Global Water Portfolio ETF (PIO - commentary - Trade Now) are two ETFs that are designed to track companies that provide services to the water industry.

ETF investors who are concerned about the implications of water shortages would stand to benefit from holding these two funds as small niche positions in a well-diversified portfolio.

On top of providing investors with access to the most crucial of commodities, the funds also allow for further diversification, as the companies they track come from countries across the globe. Nations represented in these two funds include the U.S., Japan, Switzerland and the U.K.

Year to date for the period ending Sept. 9, CGW is up just under 25%. PIO is up nearly 31%.

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At the time of publication, Dion had no positions in securities mentioned.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.