How To Invest in Water: A Guide For Retail Investors

The most valuable resource on our planet is water, but we frequently take it for granted. The need for a reliable water supply is expanding due to the growing consequences of climate change, fast urbanization, and population increase. The potential to invest in water and have a good impact while earning rewards is presented by this.

For anyone that has the watched Hollywood blockbuster ‘The Big Short‘ – and if you haven’t, we strongly suggest you do – they will know where we are going with this. Michael Burry (played by Christian Bale) is the man that predicted the burst of the United States housing bubble in 2008 and the subsequent global fiscal crisis. At the end of the movie, the credits state that Burry now invests in water and water securities.

Therefore, we should surely take the hint if the person who anticipated the biggest financial disaster in more than a century suddenly believes that water is the key to future financial success. There are more opportunities to earn money in 2023 than ever before. These 10 crypto facts and the fact that Bitcoin and other digital assets are among the best bets for a prosperous future are likely already known to you if you’re a part of the crypto community.

But in this article, we will solely focus on how to invest in water and take inspiration from the genius investor that is Michael Burry.

Understand The Water Industry

Before investing in water, it’s crucial to understand the industry and the different businesses engaged in water management, treatment, and supply. Thankfully, there are mutual funds or exchange-traded funds (ETFs) that contain companies involved in the water sector, allowing you to invest in water. To identify the best investment options, it’s recommended that you take the time to study the fund’s constituent firms’ market positions, financials, and growth forecasts.

As an example, some of the well-known water ETFs include Invesco Water Resources ETF (PHO), First Trust Water ETF (FIW), and iShares Global Water ETF (CGW). By doing your due diligence, you’ll make better-informed investment choices.

Invest in Water Utilities

Investors who are looking for stable and consistent returns may want to consider purchasing stock in water utilities that offer residential, commercial, and municipal water treatment and provision services. The water industry has proven to be a reliable and solid investment that often withstands market turbulence.

Additionally, water utilities are frequently regulated, which gives the investment an additional degree of stability and predictability. The trustworthy water utilities American Water Works (AWK), Aqua America (WTRG), and Veolia Environment (VEOEY) are excellent examples.

Look For Water-Related Services

Along with the well-known water utility firms, there are a variety of exciting enterprises that provide services relating to water, such as monitoring, improving, and conserving water. These businesses not only contribute significantly to raising the standard of water but also to better water management and lowering water waste.

These water service providers might offer an alluring investment opportunity as more companies and consumers become aware of the effects of their water usage. Examine organizations like Xylem (XYL), Tetra Tech (TTEK), and Evoqua Water Technologies (AQUA), which excel at offering first-rate services relating to water.

Consider Investing in Water Infrastructure

Those looking for long-term investment prospects might wish to think about investing in water infrastructure. Assets including dams, reservoirs, pipelines, and treatment facilities are included in these investments because they consistently produce financial returns. The efficient operation of the water sector also depends on these investments.

Investors can use municipal bonds, private equity funds, or publicly traded enterprises to invest in such infrastructure. That said, investing in infrastructure projects can be difficult and usually comes with larger minimum investment requirements.

Be Conscious of The Environmental Impact

Investing in water can potentially yield significant financial benefits. It is important, however, to consider the wider impact on the environment and society while making such investments. The water sector plays a crucial role in our ecosystem and unsustainable exploitation of water resources can lead to disastrous consequences such as environmental degradation and social issues.

Therefore, it is pertinent to invest in businesses that are dedicated to sustainability and proactively address ESG issues. Engaging industries directly to promote the adoption of sustainable practices is key to achieving this objective. So, let’s make smart investment decisions – by not just pursuing financial gains, but by working towards a sustainable future for our planet and communities in the long run.

Conclusion

Investing in water can be a win-win situation, generating returns for investors while contributing to the sustainable management of water resources. As Michael Burry recognized, investing in water can be a lucrative opportunity, considering the growing demand for water supply and treatment. However, as a retail investor, you need to be mindful of the investment risks, research the companies, and be aware of the environmental impact.

You May Like Also: