News

The First Trust Water ETF (FIW) was launched on 05/08/2007, and is a passively managed exchange traded fund designed to offer 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 5, placing it in top 31%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $1.67 billion, making it one of the larger ETFs attempting to match the performance of the Industrials - Water segment of the equity market. FIW seeks to match the performance of the ISE Clean Edge Water Index before fees and expenses.

The ISE Clean Edge Water Index is a modified market capitalization-weighted index comprised of exchange-listed companies that derive a substantial portion of their revenues from the potable and wastewater industry.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.53%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.64%.

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.

This ETF has heaviest allocation in the Industrials sector--about 56% of the portfolio. Utilities and Healthcare round out the top three.

Looking at individual holdings, Veralto Corporation (VLTO) accounts for about 4.48% of total assets, followed by American Water Works Company, Inc. (AWK) and Xylem Inc. (XYL).

The top 10 holdings account for about 39.03% of total assets under management.

Performance and Risk

Year-to-date, the First Trust Water ETF has gained about 5.32% so far, and is up about 14.05% over the last 12 months (as of 07/11/2024). FIW has traded between $77.30 and $107.24 in this past 52-week period.

The ETF has a beta of 1.01 and standard deviation of 19.08% for the trailing three-year period, making it a medium risk choice in the space. With about 37 holdings, it has more concentrated exposure than peers.

Alternatives

First Trust Water ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FIW is an excellent option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Invesco S&P Global Water Index ETF (CGW) tracks S&P GLOBAL WATER INDEX and the Invesco Water Resources ETF (PHO) tracks NASDAQ OMX US Water Index. Invesco S&P Global Water Index ETF has $966.22 million in assets, Invesco Water Resources ETF has $2.09 billion. CGW has an expense ratio of 0.56% and PHO charges 0.60%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.

Get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

First Trust Water ETF (FIW): ETF Research Reports

American Water Works Company, Inc. (AWK) : Free Stock Analysis Report

Invesco S&P Global Water Index ETF (CGW): ETF Research Reports

Invesco Water Resources ETF (PHO): ETF Research Reports

Xylem Inc. (XYL) : Free Stock Analysis Report

Veralto Corporation (VLTO) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.