| When thinking of ETFs in t he commodity sector most | | | | supplies. |
| investors think of Oil and metals. There is a commodity | | | | On a worldwide basis rapid industrialization and |
| that investors may not be aware of that is posting | | | | increasing agricultural needs have contributed to a |
| good returns. That commodity is water There is a | | | | worldwide water shortage. China, India, Egypt, Israel, |
| growing world demand for clean water worldwide. In | | | | Pakistan, Mexico and parts of the American |
| the US the aging infrastructure that delivers water | | | | southwest are just a few of the areas that have |
| needs to be replaced. | | | | experienced water shortages. |
| One ETF that takes advantage of these investment | | | | In addition another problem has been the contamination |
| opportunities is Powershares Water Resources (PHO). | | | | of existing water supplies. In the United States fertilizer |
| With many exchange traded funds down or just | | | | runoff into the gulf has caused a large problem. MTBE |
| treading water for the year so far, PHO is performing | | | | an additive in unleaded gasoline is showing up in well |
| above average. As of July 6th it is up over 9% which | | | | water from one end of the country to the other. There |
| is not bad for the recent market conditions. While gold | | | | have been many more documented cases of water |
| and oil related ETFs are currently performing better, | | | | pollution in countries outside of the US. Of course |
| their volatility is much greater and next month could be | | | | every time there is a contamination incident, the supply |
| a different story. | | | | of fresh water available for human consumption is |
| The Powershares Water Resources Portfolio is | | | | diminished. |
| based on the Palisades Water Index (TM) . The Index | | | | For investors the question is how to take advantage |
| seeks to identify a group of companies that focus on | | | | of this space. Before Powershares PHO an investor |
| the provision of potable water, the treatment of water | | | | could invest in utility funds of individual stocks. Both of |
| and the technology and service that are directly | | | | these methods are hit and miss. Utility funds are much |
| related to water consumption. This industry has | | | | more heavily weighted toward companies that are not |
| become a $260 billion plus industry. As time goes by | | | | involved in the water industry. The only other way to |
| this industry is sure to grow even larger. | | | | invest in this industry was to invest in individual stocks. |
| The Environmental Protection Agency estimates that | | | | This method has its risks because the water industry |
| in the US over the next two decades over $500 million | | | | is so broad based and picking the right stock at the |
| will be spent to upgrade or replace public water | | | | right time is not a particularly easy task. |