Should You Invest in the Invesco Global Water ETF (PIO)?

The Invesco Global Water ETF (PIO) was launched on 06/13/2007, and is a passively managed exchange traded fund designed to offer broad exposure to the Industrials - Water segment of the equity market.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient 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 $290.48 million, making it one of the average sized ETFs attempting to match the performance of the Industrials - Water segment of the equity market. PIO seeks to match the performance of the NASDAQ OMX Global Water Index before fees and expenses.

The NASDAQ OMX Global Water Index is designed to track the performance of companies worldwide that are creating products that conserve and purify water for homes, businesses and industries.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.75%, making it one of the most expensive products in the space.

It has a 12-month trailing dividend yield of 0.80%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Pentair Plc (PNR) accounts for about 8.30% of total assets, followed by Veralto Corp (VLTO) and Danaher Corp (DHR).

The top 10 holdings account for about 54.30% of total assets under management.

Performance and Risk

So far this year, PIO return is roughly 5.46%, and it's up approximately 20.41% in the last one year (as of 03/05/2024). During this past 52-week period, the fund has traded between $31.37 and $41.69.

The ETF has a beta of 1.02 and standard deviation of 18.19% for the trailing three-year period, making it a medium risk choice in the space. With about 47 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Global Water 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, PIO is a good 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 $1.59 billion in assets, Invesco Water Resources ETF has $2.07 billion. FIW has an expense ratio of 0.53% 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.

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