Thursday, March 16, 2006

Earth, Wind & Fire... and Water

ETF Investor » Investing in Water? A Deeper Look into the PowerShares Water Resources ETF (PHO): "Comment by Market Participant
2006-03-16 17:12:32

PHO is one of my core portfolio holdings (PHO, PID, and SDY), I think the macroeconomic arguments for investing in water are enourmous. As well because water service is a capital goods/natural resource industry it is fairly resisitant to inflation.

That said, the water secor as a whole has or will soon become somewhat “frothy”, witness PHO’s massive growth in market cap over the past few months. This is certainly the case for PBW (Clean energy ETF). However I think the macro element remains very compelling even if these funds don’t meet a strict value critera.

If I were to create a macro natural resources/Energy services portfolio I think I would go for a blend of IGE, PHO, PBW and XLU @ 25% each. This portfolio would have good expsure to macro-growth (IGE, PHO, PBW) and decent dividends (IGE,XLU).

PHO/PBW are also a good way to add small cap exposure to a portfolio, but beware that most of their stocks are classified as small cap growth."

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