CGW: Sector ETF For Water Infrastructure Exposure (CGW)

Core Viewpoint - The Invesco S&P Global Water Index ETF (CGW) is designed to provide investors exposure to companies involved in water-related technology and management, with a focus on large-cap constituents and a total asset under management of $1.01 billion [2][3]. Group 1: ETF Overview - CGW was launched on May 14, 2007, and is a passively managed sector ETF that tracks the S&P Global Water Index [3]. - The ETF has substantial liquidity, with an average daily trading volume of $1.91 million and a low bid/ask spread of 10 basis points [3]. - The S&P Global Water Index includes companies operating in water-related businesses, requiring a minimum market cap of $300 million and a float-adjusted market cap of $100 million [4]. Group 2: Geographic and Sector Exposure - The portfolio is geographically diversified, with approximately 60% in the US, 11.80% in the UK, 8.33% in Brazil, and 7.33% in Switzerland [5]. - Sector exposure is primarily in industrials (46.74%) and utilities (43.35%), making it a potential portfolio diversifier [7][9]. Group 3: Holdings and Performance - CGW utilizes a sampling method with 64 holdings, where the top 10 holdings account for 55% of the total portfolio weight [12]. - The ETF offers a distribution rate of $1.23 per share, yielding 1.91% on a trailing twelve-month basis, which is higher than the 1.08% yield of the S&P 500 [13]. - Compared to peer ETFs, CGW has a higher concentration in its top holdings, with the First Trust Water ETF (FIW) having a lower concentration at 40.88% for its top 10 holdings [16][18]. Group 4: Investment Strategy and Comparison - The water sector is experiencing secular growth trends, driven by increasing demand for water in various industries, making CGW suitable for both tactical positioning and long-term holding [15]. - CGW is one of the larger water sector ETFs, but FIW may offer a more optimal investment strategy due to its lower expense ratio and relative performance [16][18]. - CGW is best utilized as a satellite position within a diversified portfolio, providing differentiated exposure compared to broader market indices [23].