6 Best Water ETFs in 2022: Invest in the Future of Water

Climate change is making droughts more frequent, and access to clean water is critical. At the same time, the global water infrastructure is aging. Are there ways for you to invest in the future of water? Read to find out.

SustainFi   Updated January 8th, 2022

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Why invest in water?

As the Earth warms, droughts are becoming more frequent, limiting the supply of drinking water. But demand is growing as the global population expands. The United Nations predicts that half the global population could lack safe drinking water by 2025. Meanwhile, the global water infrastructure is aging and desperately needs to be upgraded.

We are already seeing droughts in California, a ban on lawns in Nevada, and water rationing in South Africa. In the U.S., the Infrastructure Act will give $55 billion to water-related infrastructure.

Likely future water shortages create an opportunity for water infrastructure and technology companies. Water utilities also provide a critical social service, which makes them attractive for socially responsible investors. These safe stocks reliably pay dividends.

The exchange-traded funds (ETFs) we’ve profiled here invest in companies that focus on water purification, distribution of clean drinking water, and infrastructure that includes water processing plants.

The top six water ETFs

One of the best ways to invest in water is through ETFs. There are dozens of individual companies in this space, but only six water ETFs. Each of these funds has been rated for environmental, social, and governance (ESG) factors. Water ETFs mostly invest in utilities and industrials in the U.S., the U.K., and Switzerland.

Four funds on the list are global, and two, PHO and FIW, only invest in U.S. companies. Because water is a global resource and water scarcity is a global issue, we suggest picking a global fund instead of a U.S.-only fund. We would also be careful with overexposing yourself to one country, even the U.S., due to having to keep track of water regulations.

Water ETFs List

  • Invesco Water Resources ETF (PHO)
  • First Trust Water ETF (FIW)
  • Invesco S&P Global Water Index ETF (CGW)
  • Invesco Global Water ETF (PIO)
  • Ecofin Global Water ESG Fund (EBLU)
  • Global X Clean Water ETF (AQWA)

💰 Our Pick

We like the Ecofin Global Water ESG Fund (EBLU). Despite its small size, EBLU is the cheapest fund on the list, and it also has high ESG scores from most data providers.

You can view our analysis of the top water ETFs below.

FundTickerExpense RatioAssets ($m)Inception Date2021 PerformanceMSCI RatingSustainalytics Rating
Invesco Water Resources ETFPHO0.60%2090200531.3%AAA3 / 5
First Trust Water ETFFIW0.54%1590200731.9%AA2 / 5
Invesco S&P Global Water Index ETFCGW0.57%1250200731.8%AA3 / 5
Invesco Global Water ETF PIO0.75%358200725.9%AAA3 / 5
Ecofin Global Water ESG FundEBLU0.40%67201728.9%AAA4 / 5
Global X Clean Water ETF AQWA0.50%92021-AAA2 / 5

Invesco Water Resources ETF (PHO)

  • Assets under management: $2.09 billion
  • Expense ratio: 0.60%
  • Dividend yield: 0.78%

Launched in 2005, Invesco Water Resources ETF (PHO) is the largest water ETF. PHO tracks the Nasdaq U.S. Water Index and invests in U.S. companies that create products designed to conserve and purify water for homes, businesses, and industries. It has over $2 billion under management, and its trading cost is relatively low. 

PHO has 38 holdings, largely in machinery and water utilities; the top three stocks are Waters Corporation (WAT), American Water Works (AWK), and Ecolab (ECL). American Water Works is a water utility operating across the U.S. Ecolab is a water treatment technology stock and Waters Corporation makes lab equipment, supplies, and software.

In 2021, PHO returned 31%, slightly above the S&P 500.

PHO is a good fund, but it only invests in U.S. companies. There aren’t many large publicly traded water companies to invest in in the U.S. As a result, the fund is very concentrated: its top ten holdings are almost two-thirds of the fund’s assets. We also think that water scarcity is a global issue, and it makes more sense to invest in global water utilities and technology. 

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First Trust Water ETF (FIW)

  • Assets under management: $1.59 billion
  • Expense ratio: 0.54%
  • Dividend yield: 0.97%

Established in 2007, the First Water Trust ETF tracks an index of the thirty-six largest water companies listed in the U.S. The fund currently trades on the New York Stock Exchange (NYSE) under the ticker symbol FIW. 

Despite only investing in 36 stocks, FIW is less concentrated than other water funds; the top ten stocks are around 40% of the fund. Its holdings are also different. The top three holdings are the water utility Essential Utilities (WTRG), water purification tech developer Ecolab Inc (ECL), and IDEX Corporation (IEX), the maker of water pumps and other equipment. The thirty-six stocks are weighted equally and separated into five tiers to boost the weighting of small and microcap companies. 

FIW returned over 20% in 2020 and another 32% in 2021.

Invesco S&P Global Water Index ETF (CGW)

  • Assets under management: $1.25 billion
  • Expense ratio: 0.57%
  • Dividend yield: 1.62%

The Invesco S&P Global Water Index ETF is the first fund on this list that tracks a global index of water utilities, equipment, and materials. The index is weighted by market cap. The fund currently trades on the New York Stock Exchange under the ticker symbol CGW.

Launched in 2007, CGW is a large and liquid water ETF, with $1.25 billion under management. Like other water ETFs, CGW has relatively few holdings, around 50. Roughly 50% of its assets are in U.S. companies; 16% are in the U.K., and around 9% in France. Its top three holdings are the water utility American Water Works (AWK), the water technology business Xylem Inc (XYL), and Veolia Environmental SA (EPA), a French water utility.

The fund was up 15% in 2020 and nearly 32% in 2021.

Invesco Global Water ETF (PIO)

  • Assets under management: $358 million
  • Expense ratio: 0.75%
  • Dividend yield: 1.43%

Not to be confused with the Invesco S&P Global Water Fund (PHO), the Invesco Global Water ETF tracks an index of global water conservation and purification companies. In contrast, PHO tracks U.S. companies only. The fund is listed on NASDAQ and trades under the ticker symbol PIO.

PIO has around 40 holdings, mostly industrials and utilities. The top three the plumbing distributor Ferguson plc (FERG), Ecolab (ECL), and water treatment provider Pentair plc (PNR). The top ten holdings are close to 60% of the fund’s assets. PIO invests globally, but it’s concentrated in the U.S. (47% of assets), the U.K. (21%), and Switzerland (7%). 

The fund was up 14% in 2020 and another 26% in 2021. However, PIO is the most expensive fund on the list at 0.75% ($75 annually for a $10,000 investment.)

Ecofin Global Water ESG Fund (EBLU)

  • Assets under management: $67 million
  • Expense ratio: 0.40%
  • Dividend Yield: 1.67%

Established in 2017, the Ecofin Global Water ESG Fund can be found on the New York Stock Exchange under the ticker symbol EBLU. The ETF is extensively invested in companies that provide water infrastructure and equipment.

EBLU’s 42 holdings include some names that should already be familiar to you. Plumbing distributor Ferguson plc (FERG), Geberit AG (GEBN), a maker of sanitary products, and the water utility American Water Works (AWK) are the top three. EBLU is a global fund, but it’s concentrated in the U.S. (over 50% of assets), the U.K. (17%), and Switzerland (10%). 

EBLU returned nearly 16% in 2020 and 29% in 2021. It is the cheapest fund on our list with a 0.40% expense ratio. 

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Global X Clean Water ETF (AQWA)

  • Assets under management: $9 million
  • Expense ratio: 0.50%
  • Dividend Yield: 1.11%

Launched in April 2021, the Global X Clean Water ETF (AQWA) has so far attracted $9 million in assets. This ETF from Global X seeks to invest in companies “at the leading edge of the clean water theme.” To be included, companies must derive at least 50% of their revenue from water infrastructure, equipment, or services. Eligible stocks must also meet ESG requirements.

The fund’s investments cover mostly the U.S. (two-thirds of assets), Britain, and France. And the top three holdings are Ecolab (ECL), American Water Works (AWK), and Essential Utilities inc (WTRG.)

AQWA costs 0.50%.


Water scarcity presents an opportunity for investors. Water companies should benefit as governments around the world move to address water shortfalls. By investing in water funds you are also supporting businesses that are helping solve the emerging water crisis.

🔔 Looking to pick water stocks? Check out the list of the best water stocks to buy.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

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