Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the water industry to grow over time, as the world's population keeps rising and demand for clean water increases, the PowerShares Global Water ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The water ETF's expense ratio -- its annual fee -- is 0.75%. That's good; it's higher than that of many ETFs, but also lower than that of the typical stock mutual fund. 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.
This ETF doesn't sport the best performance, partly due to struggling economies reining in water infrastructure spending. Over the past three and five years, it underperformed the world markets. 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 low turnover rate of 26%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Many water-related companies have had a tough time lately. Flowserve
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Itron
Water treatment specialist Pall
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.
If you're not convinced that this is the right time for water stocks to start building your retirement nest egg, check out our special free report, "Secure Your Future With 9 Rock-Solid Dividend Stocks," to learn about some other compelling portfolio contenders.