Interest in water investing bubbles up occasionally and a new exchange-traded fund from Tortoise Capital Advisors seeks to capitalize on the need for improved water infrastructure in the U.S.
As described in the literature for the Tortoise Water Fund (TBLU), this product “provides access to the water infrastructure, management and treatment companies that appear poised to benefit from the expected and much needed investment in rebuilding existing infrastructure, constructing new infrastructure and better managing this vital, but finite resource.”
The fund launched two weeks ago with $2.5 million in seed money. It has an expense ratio of 0.40 percent and it tracks the Tortoise Water Index.
There’s no doubt that U.S. infrastructure is crumbling, and the American Society for Civil Engineers sees water infrastructure having the most pressing need. In its 2013 “report card” on the country’s infrastructure, the group gave a letter grade of D to U.S. wastewater facilities and a grade of D-minus to inland waterways and levees. (All but one sub-sector across three categories—water and environment, transportation and public facilities—rated a letter grade of C or lower. The lone exception was the B-minus grade for solid waste.)
The estimated tab to shore up flagging U.S. infrastructure is $3.6 trillion by 2020. The ASCE will issue new ratings in early March, but it’s unlikely the situation has improved.
President Trump said on Tuesday in his address to Congress that infrastructure spending would be “financed through public and private capital,” but details remain unclear.
Tortoise is best known for its energy investments, and Jeremy Goff, director, strategic development for Tortoise, says water investing is an extension of their current research.
“When we look at things like oil and gas pipelines, they’re very essential to the functioning of society in general,” he says. “We thought, we have this capacity in what is an essential asset, why not broaden that out and incorporate everything we consider to be an essential asset. Water is the most essential of those assets, so it made sense for us to broaden our exposure there.”
TBLU enters a stream where five other water ETFs swim. The oldest and biggest water ETF by assets under management is PowerShares Water Resources Portfolio (PHO). Launched in 2005, it has $783.48 million in AUM, with an expense ratio of 0.61 percent, and is up 5.61 percent year-to-date.
The next three water ETFs were launched in 2007. In terms of AUM, the Guggenheim S&P Global Water Index ETF (CGW) is the second-biggest at $483 million. Its expense ratio is 0.64 percent and it’s up 5.73 percent year-to-date. The First Trust Water ETF (FIW) is up 4.87 percent year-to-date, has an AUM of $252.88 million and an expense ratio of 0.57 percent. The PowerShares Global Water ETF (PIO) has an AUM of $182.46 million, costs 0.75 percent and is up 5.31 percent year-to-date.