Feature Recommendation | WSBE 621

Invesco S&P Global Water Index ETF (CGW): Addressing a Critical Need around the World

According to Sustainabledevelopment.uk.org, 2.1 billion people around the world still do not have access to safe drinking water and 4.5 billion people still lack access to proper sanitation. Poor sanitation, water, and hygiene lead to about 675,000 premature deaths annually.

Estimated annual global losses from these poor conditions are USD 470 billion–USD 260 billion from inadequate water supply and sanitation, and USD 120 billion from urban property flood damages, and USD 94 billion of water insecurity to existing irrigators.

Projections for worldwide investment needs are USD 6.7 trillion by 2030 to USD 22.6 trillion by 2050.

Consequently, we are seeing more companies devoting themselves to clean water. Many are included in this month’s Feature recommendation–The Invesco S&P Global Water Index ETF (Fund).The ETF seeks to track the investment results (before fees and expenses) of the S&P Global Water Index. The fund generally will invest at least 90% of its total assets in the securities and American depositary receipts (ADRs) and global depositary receipts (GDRs) that comprise the Index, including water utilities, infrastructure, equipment, instruments and materials.

The index is designed to measure the performance of approximately 50 of the largest global companies in water-related businesses. The index is computed using the net return, which withholds applicable taxes for nonresident investors.

The fund is non-diversified. The Fund and the Index are rebalanced semiannually.

This ETF is rated 5 stars by Morningstar. And it’s Top Three holdings are:

American Water Works Co Inc (AWK) has a market cap of $28.122 billion and has an annual dividend yield of 1.56%. The company offers water and wastewater services to approximately 1,700 communities in 16 states serving approximately 3.5 million active customers.

Xylem Inc (XYL) has a market cap of $21.04 billion and an annual dividend yield of 0.96%. The company designs, manufactures, and services engineered products and solutions for the water and wastewater applications in the United States, Europe, the Asia Pacific, and internationally.

Veolia Environnement SA (VEOEY) has a market cap of $17.936 billion and an annual dividend yield of 2.69%. Veolia provides global resource management, production, and delivery of drinking water and industrial process water; collection, treatment, and recycling of wastewater; and design and construction of treatment and network infrastructure.

Holdings Style 

Value  Blend  Growth 
Large 2 9 10
Medium 5 46 4
Small 0 16 4
Source: Morningstar.com

 

Top 10 Holdings

Company Symbol % of
Assets
American Water Works Co Inc AWK 9.82%
Xylem Inc XYL 8.72%
Veolia Environnement SA VIE.PA 5.78%
Halma PLC HLMA.L 5.05%
Geberit AG GEBN 4.78%
Pentair PLC PNR 4.68%
Essential Utilities Inc WTRG 4.58%
Suez SA SEV.PA 4.25%
United Utilities Group PLC UU..L 3.98%
Severn Trent PLC SVT.L 3.61%
Source: FinanceYahoo.com

 

Top Institutional Holders

Name Reporting Date Total Holdings ($M) Position Value ($)
Morgan Stanley 5/17/21 1,240,118 60,940
UBS Group AG 5/12/21 583,088 28,653
Conservest Capital Advisors 4/22/21 491,054 24,130
Weatherly Asset Management 5/5/21 463,060 22,755
1832 Asset Management 5/17/21 452,217 22,215
MD Financial Management 5/6/21 394,231 13,408
Goldman Sachs Group 5/17/21 351,668 17,281
Bank of America 5/14/21 276,801 13,603
Prism Advisors 4/15/21 267,730 13,156
Wells Fargo 5/13/21 152,507 7,495
Source: https://fintel.io/so/us/cgw

 

Invesco S&P Global Water Index ETF (CGW)
Net Asset Value: $53.29

Performance:
Y-T-D: 13.75%
1-year:  50.00%
3-year: 17.55%
5-year: 14.53%
Risk Rating: Low
Expense Ratio: 0.570%
Dividend yield: 1.27%
Website: invesco.com

Category: U.S. Fund Foreign Large Value

Largest Sectors:

  • Industrials
  • Utilities
  • Basic Materials

Largest Holdings:

  • American Water Works Co Inc
  • Xylem Inc
  • Veolia Environnement SA
  • Halma PLC L
  • Geberit AG
Largest Institutional investors:

  • Kore Private Wealth
  • Financial Architects
  • Frontier Wealth Management


Technical Analysis: Invesco S&P Global Water ETF
by Kate Stalter

As of this writing, the Invesco S&P Global Water ETF (CGW) is posting gains for the 14th month in a row. It’s been notching fresh highs since October, and just keeps climbing.

The fund returned 13.46% year-to-date and 53.95% over the past year.

The fund tracks the S&P North American Natural Resources Index. With pressure from consumers, investors and governments for businesses to become more environmentally friendly, funds like this are clearly in demand.

Despite the rip-roaring return since April 2020, this ETF is now offering a buy opportunity as it finds support above its 10-day moving average. It’s been consolidating below its May 10 high of $53.66.

Trading volume has been below average during the consolidation, which is a good sign. That indicates that institutional owners are holding shares, rather than selling off in bulk.

As with many highly specialized funds, this one has a relatively small market capitalization, just $936.7 million.

A small market cap is not necessarily an issue for most investors, but it can mean a fund is less liquid and could be a little more difficult to buy or sell at a particular price. It could also result in higher volatility than you’d find in a fund with a larger market cap, such as the SPDR S&P 500 ETF (SPY), which is also a portfolio holding.

CGW-052621

 

Funds Inflows/Outflows

Top 10 Creations
Ticker Fund Name Net Flows*
VOO Vanguard S&P 500 ETF 3,107.96
IEFA iShares Core MSCI EAFE ETF 2,631.63
VTI Vanguard Total Stock Market ETF 2,153.27
GLD SPDR Gold Trust 1,743.99
XLF Financial Select Sector SPDR Fund 1,726.49
VTV Vanguard Value ETF 1,714.87
XLV Health Care Select Sector SPDR Fund 1,639.09
BBEU JPMorgan BetaBuilders Europe ETF 1,559.66
RSP Invesco S&P 500 Equal Weight ETF 1,550.49
MTUM iShares MSCI USA Momentum Factor ETF 1,458.72
Top 10 Redemptions
JNK SPDR S&P 500 ETF Trust -8,240.75
LQD iShares U.S. Real Estate ETF -1,666.84
GLD SPDR S&P Dividend ETF -1,333.54
XLK iShares Russell 2000 ETF -887.54
VCIT Industrial Select Sector SPDR Fund -701.31
TLT iShares Core S&P 500 ETF -608.60
IEF iShares MSCI USA Min Vol Factor ETF -589.65
USMV iShares Russell 1000 ETF -570.78
PFF ARK Next Generation Internet ETF -541.59
ACWV Principal U.S. Small-Cap Multi-Factor ETF -532.69
*Net flows in USD Millions
Source: ETF.com
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