Should You Invest in the Invesco S&P Global Water Index ETF?

Launched on 05/14/2007, the Invesco S&P Global Water Index ETF CGW is a passively managed exchange traded fund designed to provide a broad exposure to the Industrials - Water segment of the equity market.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Water is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $955.71 million, making it one of the average sized ETFs attempting to match the performance of the Industrials - Water segment of the equity market. CGW seeks to match the performance of the S&P GLOBAL WATER INDEX before fees and expenses.

The S&P Global Water Index comprises of developed market securities including water utilities, infrastructure, equipment, instruments and materials.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.56%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.47%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Xylem Inc/Ny XYL accounts for about 8.56% of total assets, followed by American Water Works Co Inc AWK and Veralto Corp VLTO.

The top 10 holdings account for about 54.53% of total assets under management.

Performance and Risk

The ETF has added roughly 5.49% and is up about 12.92% so far this year and in the past one year (as of 07/09/2024), respectively. CGW has traded between $44.46 and $59.71 during this last 52-week period.

The ETF has a beta of 0.98 and standard deviation of 18.19% for the trailing three-year period, making it a low risk choice in the space. With about 67 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P Global Water Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, CGW is a sufficient option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

First Trust Water ETF FIW tracks ISE Clean Edge Water Index and the Invesco Water Resources ETF PHO tracks NASDAQ OMX US Water Index. First Trust Water ETF has $1.66 billion in assets, Invesco Water Resources ETF has $2.08 billion. FIW has an expense ratio of 0.53% and PHO charges 0.60%.

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