infrastructure- investing in water etf's

[jk]

sometime ago i noticed that there was an etf for water investments, symbol pho - inception 12/06/05. i was poking around etfconnect.com [recommended] when i noticed there are now 3 water investment etfs! the other 2, fiw [inception 5/11/07] and cgw [inception 5/14/07] have apparently both started trading within the last month.

remember how many internet funds got started in the '90's?

[DemonD]

Re: infrastructure- investing in water etf's

The problem with "investing" in a water etf is that water is either done by utilities, or a mega-cap corp like GE. (They have a whole division related to water infrastructure.) In either case, you'd be better off just buying the stock. Why buy an etf full of utilities and GE?

If you want to capture the water market, I posted before the only company I see that is a "pure play" water infrastructure company is Mueller Water (MWA). Strong fundamentals behind that company too.

[dbarberic]

Re: infrastructure- investing in water etf's

I'm not sure what you're talking about when you say that water ETFs are all just utilities or meg-cap corps.

Check out the holdings of PHO (Powershares Water Resources Portfolio).

21% utilities
58% industrials

With their largest 3 water related industrial holdings are:

VMI	Valmont Industries Inc.	4.64%
TTEK	Tetra Tech Inc.	4.59%
URS	URS Corp.	4.00%

GE is sitting a 1.57%

VMI has revenue about $1.32B
TTEK has revenue about $972M
URS has revenue about $4.4B

The largest industrial holdings are hardly what I'd consdier mega-cap corps. In fact, they are middle market companies.

[DemonD]

Re: infrastructure- investing in water etf's

Out of those 3 companies you mentioned (all of which have P/E's well north of 20, but I would say that as money-making ventures, they do well), only Tetra Tech has as a main focus water infrastructure. All three are general "infrastructure" plays, and while that does involve water, none are completely water-specific (although a large portion of TTEK as stated is water-based).

The point I'm trying to make, although I will admit my first post I was talking out my ass, is that pure water plays are very few and far between. Go look at their holdings, and look at the individual companies.

Also, based on percentages from powershares.com, utilities make up 21.17% of holdings, as well as other things like telecom, healthcare, business services. "Industrial materials," if that is what you are looking for in infrastructure, is 61.51% in sector weight of the fund.

Basically what I'm saying, is that despite the fund trying to capture the water-based companies, it's misleading because many (or most) of the companies have significant or even primary money-generating divisions that are not related to water infrastructure.

And yes, I checked, GE is in fact in there at 1.58% weight of the fund.

My assertion is that you would be better off using the fund holdings to cherry pick the best companies off that list and buy them on your own, without using an etf.