Global Water ETFs: 2024–25 Performance and 2026 Outlook

Water-themed ETFs have delivered modest but positive returns in 2024–25. For example, Invesco’s S&P Global Water ETF (CGW) is up roughly 18.8% year-to-date in 2025 (with a one-year gain of ~14.8%). Similarly, Amundi’s MSCI Water ETF (AWAT) returned about +11% in 2024. Canada’s iShares Global Water ETF (CWW.TO) also logged low-double-digit gains (roughly +13% in 2024 and mid-teens YTD 2025), and iShares’ large Global Water UCITS (IH2O.L) has seen similar performance. By contrast, smaller niche funds (such as L&G’s Clean Water ETF, ticker XMLC.DE) have been nearly flat in 2025. These figures include reinvested dividends. In context, major water ETFs generally outperformed global utilities but lagged the rally in broad markets: for example, CGW paid a 1.9% dividend yield and traded in a ~50–65 range.

AUM, Flows and Relative Performance

Assets under management (AUM) in these funds vary widely. iShares’ IH2O.L is the largest (€2.0 billion), followed by Amundi’s AWAT (€1.57 billion) and Invesco’s CGW (about $1.0 billion). By comparison, Canada’s CWW.TO is roughly CAD $0.3–0.4 billion, and XMLC.DE is only ~C$0.84 billion. Fund flows have been mixed: CGW saw about $60 million of net outflows over the past year, reflecting modest investor interest. Other water ETFs saw only small inflows or flat flows. Overall, water funds’ market capitalizations and flows suggest steady but tepid appetite: they remain niche sectors within broad equity markets. For perspective, the largest “water” funds (including U.S. ones like Invesco Water Resources PHO) rank well below mega-cap indices.

Portfolio Composition and Regional Exposure

Water ETFs invest in companies across the water value chain: utilities, infrastructure, treatment, and equipment. Top holdings illustrate this mix. For CGW (Invesco S&P Global Water), the five largest positions (as of late 2025) are Xylem Inc. (8.5%), American Water Works (7.8%), Sabesp (Brazilian utilities, ~6%), United Utilities (UK, ~6%), and water infrastructure firm Valero (tickers in [2†L550-L558]). Similarly, IH2O and AWAT hold many of the same global names. In aggregate, North American companies (especially U.S. water utilities like Xylem, American Water, Roper Technologies, etc.) typically comprise the largest weight, with Europe (Veolia, Suez, Severn Trent) and some emerging markets (Sabesp, SUEZ’s Asian operations) also represented. These ETFs are mostly unhedged USD/EUR, so currency moves (e.g. a stronger USD) have modest impact. Allocation shifts in 2024–25 were minor – funds generally rebalanced to index weights, with any industry rotation remaining small given the narrow focus.

Policy Drivers and 2026 Outlook

Water ETFs’ performance in 2024–25 reflected broader economic factors and sector news. Steady interest rates and modest global growth limited extreme volatility, while ESG and infrastructure themes supported water stocks. For example, government initiatives like the U.S. infrastructure law (with billions for clean water projects) and ongoing UN Sustainable Development Goal 6 efforts have underscored long-term water demand. Notably, the U.S. EPA estimates roughly $625 billion in drinking-water infrastructure needs over 20 years, highlighting the vast investment gap. Climate-related pressures (droughts, floods) also keep water security in focus, although water firms have less direct policy risk than, say, energy or defense.

Looking ahead to 2026, we expect water ETFs to remain a defensive-play growth theme. Analysts note that aging water infrastructure worldwide implies sustained capital spending. As one industry survey shows, U.S. utilities alone face hundreds of billions in pipe and plant upgrades. This suggests continued steady demand for water companies. However, at the same time, water stocks may lag a broader market rally if growth sectors dominate. Most forecasters see water equities delivering moderate returns (low-to-mid single digits) in 2026, driven by incremental earnings growth and stable dividends. In sum, the outlook is cautiously positive: water ETFs offer a hedge against inflation and environmental volatility, underpinned by long-term policy support, but are not expected to dramatically outperform broad markets over the next year absent a major new catalyst.