Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the water industry to thrive over time, as our global population grows and needs more and more clean water, the Guggenheim S&P Global Water Index ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The Guggenheim ETF's expense ratio -- its annual fee -- is 0.70%. That's higher than many ETFs, but still lower than the typical stock mutual fund.
This ETF doesn't have the most impressive performance, slightly lagging the S&P 500 over the past three years, but it's the future that matters most. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
With a very low turnover rate of 8%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do. The fund is fairly small, too, so if you're thinking of buying, beware of occasionally large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.
What's in it?
Several water-related companies had strong performances over the past year. Pentair
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Itron
The big picture
Demand for water isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.
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