In addition to potentially being a low-impact, small-cap play, I believe that the kicker of the water story coming to fruition offers an upside catalyst to PHO that small-caps in general do not have. Therefore, if these numbers hold up, PHO provides a low-beta alternative to capturing small-cap growth, and this could be very important given that by all historical measures the small-cap leadership should soon end. No review of a product like this would be complete without attempting to assess the risk. This is not an emerging market investment, but PHO does stand to benefit from development in emerging market countries. There also is the danger that some unknown event could derail the modernization theme in a country or region. Also, the water industry is an emerging industry. To own PHO is to believe that the index-keepers will be smart about additions and deletions going forward. I believe PHO offers a clear and obvious framework for long-term outperformance, but I would expect it to struggle if there is a short-term downturn for the small-caps. For investors who like water as an investment theme but do want the small-cap exposure that goes with PHO, they could look at several of the larger components of PHO, such as Suez ( SZE), which has a $28 billion cap, Veolia Environnement ( VE), $17 billion, or United Utilities PLC ( UU), $10 billion. As for me, the water theme makes sense intuitively. I will be a buyer of PHO personally and for clients in very short order after the listing. To be clear, this is a longer-term idea. But as the water theme evolves in awareness and social importance, I would expect something like PHO to add some real leadership in a diversified portfolio.