The ESG (Environmental, Social, and Governance) mandates which are increasingly being put in place by institutional and individual investors are having a direct impact on the flow of funds into various sectors.
In this article, I'm going to discuss one Exchange Traded Fund (ETF) in the water resource is space for investors seek ESG exposure.
Water resources, and the companies that manage said resources, are often considered only in passing by many investors. I saw for a long time that clean drinking water, and the services that go into providing this precious resource, are underappreciated by humanity, at least in North America.
The water assets are among the most critical in sustaining life, as well as any other sustainability goals, so bringing such assets to the forefront in this article seemed like a prudent idea.
The Invesco Water Resources ETF (NYSE:PHO) is a U.S.-based ETF focused on water resources in the context of sustainability. This ETF has seen a runup in its valuation multiple of late due in part to an ESG related rush into these sectors.
However, I do believe this tailwind is likely to continue over the long term. The companies owned in this ETF literally keep the tabs open for investors, providing critical utility infrastructure with stable cash flows and increasing earnings generation potential over the long term, making this a top ETF pick of mine now.
Invest wisely, my friends.
