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Should You Invest in the Guggenheim S&P Global Water Index ETF (CGW)?

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Designed to provide broad exposure to the Industrials - Water segment of the U.S. equity market, the Guggenheim S&P Global Water Index ETF (CGW - Free Report) is a passively managed exchange traded fund launched on 05/14/2007.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Industrials - Water is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $585.75 M, making it one of the larger ETFs attempting to match the performance of the Industrials - Water segment of the U.S. equity market. CGW seeks to match the performance of the S&P GLOBAL WATER INDEX before fees and expenses.

The S&P Global Water NR Index is comprised of approximately 50 equity securities, selected from a universe of companies listed on global developed market exchanges, which include water utilities, infrastructure, equipment, instruments and materials.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.61%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.82%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, American Water Works Co Inc (AWK - Free Report) accounts for about 8.65% of total assets, followed by Xylem Inc/ny (XYL - Free Report) and Danaher Corp (DHR - Free Report) .

The top 10 holdings account for about 49.70% of total assets under management.

Performance and Risk

Year-to-date, the Guggenheim S&P Global Water Index ETF has lost about -5.71% so far, and was up about 3.80% over the last 12 months (as of 06/27/2018). CGW has traded between $32.12 and $36.40 in this past 52-week period.

The ETF has a beta of 0.87 and standard deviation of 13.37% for the trailing three-year period, making it a low risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.