Should You Invest in the First Trust Water ETF (FIW)?


Looking for broad exposure to the Industrials - Water segment of the equity market? You should consider the First Trust Water ETF (FIW - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Water is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $1.56 billion, making it one of the larger ETFs attempting to match the performance of the Industrials - Water segment of the equity market. FIW seeks to match the performance of the ISE Clean Edge Water Index before fees and expenses.

The ISE Clean Edge Water Index is a modified market capitalization-weighted index comprised of exchange-listed companies that derive a substantial portion of their revenues from the potable and wastewater industry.


When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.53%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.66%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector--about 53.80% of the portfolio. Utilities and Healthcare round out the top three.

Looking at individual holdings, Ferguson Plc (FERG - Free Report) accounts for about 4.44% of total assets, followed by Roper Technologies, Inc. (ROP - Free Report) and Agilent Technologies, Inc. (A - Free Report) .

The top 10 holdings account for about 40.39% of total assets under management.

Performance and Risk

The ETF has added about 3.15% and is up roughly 16.94% so far this year and in the past one year (as of 03/06/2024), respectively. FIW has traded between $77.30 and $99.25 during this last 52-week period.

The ETF has a beta of 1.03 and standard deviation of 19.12% for the trailing three-year period, making it a medium risk choice in the space. With about 38 holdings, it has more concentrated exposure than peers.


First Trust Water ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FIW is an excellent option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Invesco S&P Global Water Index ETF (CGW - Free Report) tracks S&P GLOBAL WATER INDEX and the Invesco Water Resources ETF (PHO - Free Report) tracks NASDAQ OMX US Water Index. Invesco S&P Global Water Index ETF has $959.06 million in assets, Invesco Water Resources ETF has $2.03 billion. CGW has an expense ratio of 0.57% and PHO charges 0.60%.

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.

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