Should You Invest in the Invesco Water Resources ETF (PHO)?

Designed to provide broad exposure to the Industrials - Water segment of the equity market, the Invesco Water Resources ETF (PHO) is a passively managed exchange traded fund launched on 12/06/2005.

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 9, placing it in bottom 44%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $2.17 billion, making it one of the larger ETFs attempting to match the performance of the Industrials - Water segment of the equity market. PHO seeks to match the performance of the NASDAQ OMX US Water Index before fees and expenses.

The NASDAQ OMX US Water Index tracks the performance of US exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.59%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.48%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector--about 63.50% of the portfolio. Information Technology and Utilities round out the top three.

Looking at individual holdings, Roper Technologies Inc (ROP) accounts for about 8.28% of total assets, followed by Ferguson Enterprises Inc (FERG) and Ecolab Inc (ECL).

The top 10 holdings account for about 57.96% of total assets under management.

Performance and Risk

Year-to-date, the Invesco Water Resources ETF has added roughly 5.42% so far, and is up about 1.74% over the last 12 months (as of 05/19/2025). PHO has traded between $58.13 and $72.14 in this past 52-week period.

The ETF has a beta of 1.01 and standard deviation of 19.12% for the trailing three-year period, making it a medium risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Water Resources ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PHO is a sufficient option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Invesco S&P Global Water Index ETF (CGW) tracks S&P GLOBAL WATER INDEX and the First Trust Water ETF (FIW) tracks ISE Clean Edge Water Index. Invesco S&P Global Water Index ETF has $956.37 million in assets, First Trust Water ETF has $1.84 billion. CGW has an expense ratio of 0.56% and FIW charges 0.53%.

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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This article originally published on Zacks Investment Research (zacks.com).

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