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

If you're interested in broad exposure to the Industrials - Water segment of the equity market, look no further than the First Trust Water ETF (FIW), a passively managed exchange traded fund launched on 05/08/2007.

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 10, placing it in bottom 38%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $1.81 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.

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 0.53%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.71%.

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 56.80% of the portfolio. Utilities and Healthcare round out the top three.

Looking at individual holdings, American Water Works Company, Inc. (AWK) accounts for about 4.36% of total assets, followed by Idexx Laboratories, Inc. (IDXX) and Ferguson Enterprises Inc. (FERG).

The top 10 holdings account for about 39.19% of total assets under management.

Performance and Risk

The ETF has added roughly 2.77% and is down about -1.31% so far this year and in the past one year (as of 05/22/2025), respectively. FIW has traded between $90.26 and $110.91 during this last 52-week period.

The ETF has a beta of 1.04 and standard deviation of 19.08% for the trailing three-year period, making it a medium risk choice in the space. With about 37 holdings, it has more concentrated exposure than peers.

Alternatives

First Trust Water 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, FIW is a good 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 Invesco Water Resources ETF (PHO) tracks NASDAQ OMX US Water Index. Invesco S&P Global Water Index ETF has $948.85 million in assets, Invesco Water Resources ETF has $2.12 billion. CGW has an expense ratio of 0.56% and PHO charges 0.59%.

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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