Finding specific investments with the potential to truly go parabolic over the long-term is the goal of every investor. Every investment has risk, and none should be considered on its growth profile alone.
In this article, I am going to discuss one Exchange Traded Fund (ETF) I believe has such a growth profile with little in the way of significant long-term risk.
The Invesco Water Resources ETF (NYSE:PHO) is perhaps my top ETF pick for long-term investors seeking growth in their portfolios.
This ETF contains a wide variety of water resource companies in the U.S., a market which has privatized a large percentage of water plants, many of which were previously run by municipal or state authorities but are now privately owned and operated.
The need for clean drinking water, and a consumer’s propensity to pay for such a valuable commodity, needs no explanation. This key driver of pricing power and consolidation with this sector should provide enough of a secular growth catalyst by itself.
That said, the movement toward Environmental, Social, and Governance (ESG) mandates from mainly institutional investors will push a tremendous amount of capital into investments like this ETF.
The favorable supply and demand of investments of new capital in sectors such as water resources makes this broad asset class a potentially parabolic trade long-term, despite a valuation which is certainly not cheap today.
I expect to see additional multiple expansion materialize, particularly if money remains cheap and capital has nowhere else to flow.
Invest wisely, my friends.
