In 2022 most investors delayed opening or never opened their investment statements because performance took a big hit this year, especially for technology. The Nasdaq composite index is down 30%. Tesla stock is down over 50%, Meta is down over 60%, and Amazon is down almost 50%. The broader-based S & P 500 index is down 17%, and the Dow Jones Industrial Average is down just over 7% at the time of this writing. We mentioned Bitcoin last year, which was enjoying an amazing run at the time, is down over 60% this year. That’s lots of bad news, but interesting to analyze water stocks because our premise has been water stocks should perform better when others are doing poorly because we always need water. Let’s look below at how our portfolio of water stock did in 2022. It is important to note we have been following these for 12 years now.
The California water index is up over 35% this year after a more than 46% gain last year. That’s an 81% gain in just two years. Remember, the Index tracks the rights, leases, and sales transactions across California’s five largest water regions. So this should be a good sign for our Index of water stocks.
American Water Works Co. Inc. (NYSE: AWK)
AWK is down 15% YTD after a 22% gain last year. However, this stock continues to be a solid performer. Over the previous five years, it is up 71%. I’m not sure where we could have found such good gains in the past five years in such a conservative industry. American Water Works water stock provides water and wastewater services to 15 million people in 30 U.S. states and parts of Canada. It has been the best-performing water stock in the portfolio.
Aqua America Inc. (NYSE: WTRG)
Aqua American/Essential Utilities is down 9% this year after a gain of 10% last year. In the previous five years, it has gained 26%. Aqua America is a holding company for regulated utilities serving 3 million customers in 13 states ranging from Texas to Maine. In January 2020, Aqua America changed its name to Essential Utilities.
California Water Service Group (NYSE: CWT)
This water company is a utility serving California, Washington, New Mexico, and Hawaii, and American States Water Co. Year to date, 2022 California Water Service Group is down over 11% after a 32% gain last year. The water stock has been up 45% for the past five years. A vast majority of their revenue comes from states hit hard by drought.
American States Water Company (NYSE: AWR)
This California-based utility provides water, electricity, and contracted services in the United States. YTD, this stock is down 6% after being up 25% last year. During the past five years, this stock is up 70%, and has been a solid performer for the previous 12 years, and is diversified across the United States.
Exchange-Traded Funds or ETFs
Another option to invest in water is Exchange Traded Funds (ETF). Think of an exchange-traded fund as a mutual fund that trades on a public exchange, like the New York Stock Exchange. You get the diversification of a fund with the added benefit of the liquidity of a public exchange. Below is the past performance of a few of the popular water ETFs we have been following:
Invesco Global Water ETF (PIO)
This ETF is based on the Palisades Global Water Index. It focuses on companies providing potable water. This year the ETF is down 20% this year after advancing 23% last year. It is up almost 31% during the previous five years.
Power Shares Water Resources Portfolio (PHO)
The largest Water ETF with more than $1 billion in assets. It also invests in companies providing potable water. In 2022 it is down 11%, after a 28% gain last year. It has increased by 76% in the last five years.
Guggenheim S&P Global Water Index ETF (CGW)
This ETF corresponds to the S&P Global Water Index. This ETF is the first U.S.-listed global Water ETF. This year it is down 18% after gaining 28% in 2021. Over the past five years, it is up 37% the last five years.
First Trust ISE Water Index Fund (FIW)
First Trust focuses on companies with wastewater and potable water direction. It is down 11% YTD and up 71% in the past five years.
What an exciting year for water stocks and water ETFs. Even with the price of water increasing dramatically, none of the water stocks or ETFs gained this year. American States water company is the best-performing stock again this year. Only down 6%, with an increase of 70% over the past five years. The ETFs all took a hit this past year after excellent performances the year before. However, all the investments did better than the Nasdaq market, and all the stock investments outperformed the S & P index as well. In general, the portfolio has outperformed the stock market over the past 12 years, and we look forward to seeing how it moves forward.
Please do not take any of the information in this post as a recommendation to buy stocks or ETFs. This is simply an attempt to start a meaningful conversation on the blog about investing in water. What do you think is in store for the stock market and water stocks in 2023? If you enjoyed this article, please consider subscribing or following me on Twitter @H2oTrends.