The challenge of water and sanitation has been one of the United Nations Sustainable Development Goals since 2016. And within this niche, there are investment opportunities—also through ETFs. Water is a vital element, not only for sustaining life, but also for the development of new technologies and industries. In First Trust’s opinion, water infrastructure represents “an attractive investment opportunity,” driven by new catalysts and emerging trends such as water-intensive manufacturing, the shift to liquid cooling for AI data centers, and hydraulic fracturing in the energy sector.
The firm explains that the reindustrialization of the U.S. economy will lead to a drastic increase in water demand in the coming years, especially in sectors that are major water consumers, such as semiconductor manufacturing. As these and other projects expand, First Trust forecasts that “substantial investments” will be needed in water infrastructure.
In addition, advances in generative AI have captured global attention. To meet the growing performance demands of AI, global data center capacity is expected to grow by 52% between 2024 and 2027. In this context, keeping high-performance processors cool presents a significant challenge for traditional air-cooling systems, which has led the sector to adopt liquid cooling. Here, the firm cites JLL estimates, indicating that hybrid cooling—70% liquid and 30% air—“has become the standard thermal management strategy for new data centers.”
Hydraulic fracturing (“fracking”) also continues to be a key driver of demand for water infrastructure, according to First Trust. Fracking involves injecting high-pressure water, sand, and chemicals into underground rock formations to extract oil and gas. A single fractured well can consume between 1.5 and 16 million gallons of water.
Moreover, fracking produces “flowback water,” a toxic byproduct that requires treatment using technologies such as microfiltration and reverse osmosis. “From sourcing water to its treatment, transport, and control, fracking processes—which consume vast amounts of water—generate considerable demand for water resources,” the firm notes.
In light of these emerging trends, investing in U.S. water infrastructure becomes increasingly important. The 2025 report by the American Society of Civil Engineers (ASCE) on the state of U.S. infrastructure gave poor marks to water systems, including a low pass for drinking water, a solid pass for wastewater, and a failing grade for stormwater systems.
This reflects decades of underinvestment, as data from the Congressional Budget Office shows that spending on water infrastructure has grown only 0.3% over the past 20 years. The ASCE estimates that $1.65 trillion will be needed between 2024 and 2033 for drinking water, wastewater, and stormwater infrastructure. With only $655 billion funded, “the remaining $1 trillion funding gap is the largest of any infrastructure sector.”
Investors can benefit from these macro trends by including ETFs that focus on water-related industries in their portfolios. One such option is the First Trust Water ETF, listed on the NYSE. It tracks the ISE Clean Edge Water Index, composed of 36 stocks focused on the drinking water and wastewater sectors, including water distribution, infrastructure development, purification and filtration, as well as related services like consulting, construction, and metering.
Another option is BlackRock’s iShares Global Water UCITS ETF U.S. Dollar (Distributing), which tracks the S&P Global Water Index. This year, its valuation has increased by just over 15%, through investments in companies involved in the global water sector, across both developed and emerging markets. As a complement, Amundi offers the Amundi MSCI Water UCITS ETF Dist, which aims to replicate the performance of the MSCI ACWI IMI Water Filtered Index.
A further option is the Invesco Water Resources ETF, based on the Nasdaq OMX Global Water Index, which seeks to replicate the performance of companies listed on global exchanges that produce products designed to conserve and purify water for homes, businesses, and industries. This ETF is listed on the Nasdaq.
