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Thursday, June 4, 2009

Time to Buy Water ETFs?

Water scarcity is rising up the agenda as a major social and economic issue affecting the worlds' poor. Risks to grain harvests are rising due to the fact that 2.8-billion people live in areas of high water stress. The opportunity for greater water efficiencies is enormous in the developed world too and so is the investment opportunity.

The potential for efficiency gains in water transmission and use are enormous given that about half of water used for irrigation is lost to evaporation and waste, according to a report by the World Economic Water Initiative.

The reality is that water usage is rising all over the world. Changing diet patterns toward meat consumption doubles the need for water for production relative to a vegetarian diet. In the developed world, energy production accounts for nearly 40% of all water withdrawals and that need will grow by 50% by 2025 according to the World Economic Forum.

I have added CGW Claymore water ETF.

Claymore S&P Global Water Index ETF (the Fund) seeks investment results that correspond generally to the performance of an equity index called the S&P Global Water Index (the Index). The Index consists of approximately 50 stocks selected based on the relative importance of the global water industry within the company's business model from a universe of companies listed on global developed market exchanges. The Index is designed to have a balanced representation from different segments of the water industry consisting of two clusters: 25 water utilities and infrastructure companies and 25 water equipment and materials companies based upon Standard & Poor's Capital IQ (CIQ) industry classification. The Fund’s index provider is Standard & Poor's. The Fund will normally invest at least 90% of its total assets in common stock and American depositary receipts (ADRs) that comprise the Index. The Fund’s investment advisor is Claymore Advisors, LLC.

Disclosure I am long CGW shares

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