Global Water Industry ETF: A Ticket to Clean Water Infrastructure

The Invesco S&P Global Water Index ETF (CGW) is well positioned to deliver due to the growing demand for clean water and aging infrastructure. The ETF tracks the performance of the S&P Global Water Index, which includes companies involved in the water industry globally. With clean water becoming less accessible and infrastructure aging, CGW offers a ticket to the global water industry.

The Invesco S&P Global Water Index ETF (CGW) is well positioned to deliver due to the growing demand for clean water and aging infrastructure. The ETF tracks the performance of the S&P Global Water Index, which includes companies involved in the water industry globally. With clean water becoming less accessible and infrastructure aging, CGW offers a ticket to the global water industry.

CGW was launched on May 14, 2007, and is a passively managed exchange-traded fund designed to offer broad exposure to the Industrials - Water segment of the equity market [2]. The ETF is sponsored by Invesco and has amassed assets over $981.10 million, making it one of the average-sized ETFs attempting to match the performance of the Industrials - Water segment of the equity market. CGW seeks to match the performance of the S&P Global Water Index before fees and expenses. The index comprises developed market securities including water utilities, infrastructure, equipment, instruments, and materials.

The ETF has an annual operating expense ratio of 0.56%, making it on par with most peer products in the space. It has a 12-month trailing dividend yield of 1.97%. The top holdings of CGW include Xylem Inc (XYL), American Water Works Co Inc (AWK), and Cia De Saneamento Basico Do Estado De Sao Paulo Sabesp (SBSP3). The top 10 holdings account for about 52.15% of total assets under management.

CGW has added about 14.91% so far this year and is up roughly 9.62% in the last one year (as of July 21, 2025). The ETF has a beta of 0.97 and a standard deviation of 16.98% for the trailing three-year period, making it a low-risk choice in the space. With about 75 holdings, it effectively diversifies company-specific risk.

The U.S. water infrastructure crisis is no longer a distant warning but an urgent reality. Aging pipes, emerging contaminants like PFAS, and the compounding risks of climate change have pushed the nation's drinking water systems to a breaking point. According to the Environmental Protection Agency, over $625 billion in investments are needed over the next two decades to address these challenges—a figure that has grown by 30% since 2018 [3]. This crisis creates a unique inflection point for companies like American Water, which operates in 1,700 communities across 53,500 miles of pipelines.

American Water's capital investment plan from 2023 to 2027 is not just a response to these challenges but a strategic bet on the inevitability of infrastructure reform. By replacing lead lines, installing PFAS treatment systems, and integrating climate-resilient technologies, American Water is aligning its capital allocation with the most pressing needs of the sector. The company's ability to secure rate base growth is a key differentiator. Authorized revenue increases from rate cases and infrastructure surcharges added $279 million annually to its top line in 2023.

For investors seeking exposure to the global water industry, CGW offers a diversified and low-risk option. With the growing demand for clean water and the urgent need for infrastructure reform, the water industry is poised for significant growth. CGW's alignment with these trends positions it to deliver consistent returns for decades to come.

References:
[1] https://seekingalpha.com/article/4802882-cgw-a-ticket-to-the-global-water-industry
[2] https://finance.yahoo.com/news/invest-invesco-p-global-water-102004481.html
[3] https://www.ainvest.com/news/case-american-water-era-critical-water-infrastructure-reform-2507/