What is Water ETF?

Water ETF is an exchange-traded fund that primarily invests in firms that are operating in the horizon of water distribution, treatment and sales.

This type of ETF goes beyond the possibility of private organizations, third-party marketers, and deals confirmed with utility companies.

The Global Issue of Water

As we all know that the,water is required by every form of life; however, the quantity is limited. Several major cities in varying countries across the globe are facing extreme droughts and water shortages. For centuries altogether, India has been experiencing droughts. Many of them resulted in a drastic reduction in human life losses, farm animal fatalities and crop production. Although a lot of decreasing water supply comes from drier monsoon seasons, climate change and global warming also play vital roles in such situations.

Majorly, since 2015, India is experiencing widespread droughts. In fact, approximately 600 million Indians are facing higher to extreme water problems. According to a report put forth by NITI Aayog, it is said that by 2030, the water demand in the country will be twice its available supply. In terms of a water crisis, it is not only climate change, but ageing and faulty infrastructure is the culprit as well. As per the World Wildlife Fund, almost 1.1 billion people in the world don’t have access to proper, clean water.

How Water ETF Work?

A Water ETF comprises manufacturers of such products that are related to water, such as the retail sale of bottled water, distribution of water systems for the public at a municipal level, and more. Owing to a massive Range of services that this ETF might cover, investors could come across companies concentrating on testing, purifying and bottling water.

Considering the necessity of water, the ETF is not a significant indicator of a healthy bull Market. Though consumed in various ways, water is used by every living thing and needed to survive on the planet earth. Still, despite the prevalent necessity, water funds don’t come without any risks. Just like any other investment, with water ETF, there are plenty of possibilities for loss. For instance, a company that is bottling water may stop earning profits. Or, a company that purifies water may experience a lawsuit that needs a massive payout. Moreover, even public utilities are subjected to financial losses.