Supply and Demand To Boost These Three (3) Water ETFs (PHO, PIO, CGW, NLC)

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October 27, 2011 3:21pm NYSE:CGW NYSE:PHO

Kevin Grewal: Supply and demand forces are dictating that the global water sector is expected to witness growth and positive price support in the future, making the PowerShares Water Resources (NYSE:PHO), the PowerShares Global Water (NYSE:PIO) and the Guggenheim S&P Global Water

(NYSE:CGW) attractive investments.

According to the World Resources Institute, consumption of water has been growing at a rate more than twice that of population growth.  Demand for the essential commodity is expected to increase by more than 50 percent over the next 15 years in developing markets and by more than 15 percent in developed markets like the United States.

This demand in developing nations is emerging as incomes are rising and people are moving out of rural areas into more developed parts of the countries. In fact, a report by the United Nations indicates that nearly 50 percent of the world’s population currently lives in cities and over the next 35 years this number is expected to rise to more than two-thirds.

Further demand support is likely to dwell from increasing global populations.  Most recently, the world’s population broke the 7 billion mark and it expected to surpass the 9 billion mark within the next 40 years.  Much of this growth has been, and will likely continue to be, witnessed in the developing nations of Africa and Asia.

On the supply side, water scarcity and water stress has already prevailed in parts of Russia, China and the US.  Furthermore, the expected impacts of Mother Nature’s doing- more severe flooding and droughts- are expected to curtail the supply of potable water.

The world has a large amount of water; however, only 2.5 percent of it is fresh water and a mere 33 percent of this fresh water can be used for agricultural purposes and human consumption.

At the end of the day, a supply and demand imbalance in the most important commodity around the world has, and is likely to continue, to prevail, setting the stage for an influx in investment into the sector on both the domestic and international stage.

Written By Kevin Grewal From ETF Tutor Disclosure: No Positions

Kevin Grewal is the founder, editor and publisher of ETF Tutor and serves as the editor at, where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Prior to this, Grewal was a quantitative analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor’s degree from the University of California along with a MBA from the California State University, Fullerton. He is a contributing author on The Street – his articles can also be found published on various sites including Yahoo! Finance, The Globe and Mail , Daily Markets, MSN Money, Seeking Alpha, Fidelity Investments, Traders Library, and Minyanville.

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