Worried About Inflation? Invest in Water and Agriculture With These 2 Oddball ETFs

Index funds are great and all, but everybody loves a cool, thematic ETF once in a while.

| More on:
exchange traded funds

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Exchange-traded funds (ETFs) are great for expressing a thematic investment strategy. This is an active bet on which market sectors are likely to outperform, such as tech, energy, banking, or even marijuana!

With high inflation rates sending the prices of groceries and other food staples soaring in Canada, some investors have been tilting their portfolios towards the agricultural and water sectors.

The first ETF produces the food we eat, ensuring that we have the most basic of necessities fulfilled. I would consider it the hidden backbone of the economy as we know it. Without food, everything else grinds to a standstill.

The second ETF produces, purifies, and distributes the most important commodity in our life — water. Water has several characteristics that make it desirable as an investment: it is scarce with a finite supply, it can be owned and controlled by private parties, and it can be sold.

Now, I’m not encouraging you to go out and fill a storage locker with bottles of water, build a reservoir, buy a cattle herd, or start a chicken coop. There are easier ways to invest in water and agriculture, and today we’ll examine two ETFs from BlackRock that allow you to do so.

iShares Global Water Index ETF

iShares Global Water Index ETF (TSX:CWW) seeks to replicate the performance of the S&P Global Water Index, net of fees. This ETF holds a total of 50 global water industry stocks, including those of water utilities, infrastructure, materials, and equipment companies.

Around 51% of the stocks held are from the U.S., while 15% are from the U.K., and 9% are from France. Companies in Switzerland, China, Japan, Italy, Canada, the Netherlands, and Australia are included, too.

CWW currently has assets under management (AUM) of $358 million, which is lower than most index funds but sufficient for liquidity and trading purposes.

The fund will cost you a management expense ratio (MER) of 0.66% a year to hold, which is expensive compared to index funds, but not so much for a thematic fund.

CWW also pays a surprisingly decent 12-month trailing distribution yield of 3.05%, owing to its substantial holding of utilities stocks.

iShares Global Agriculture Index ETF

iShares Global Agriculture Index ETF (TSX:COW) seeks to replicate the Manulife Asset Management Global Agricultural Index, net of fees.

This ETF holds 37 global agriculture sector stocks, including those of companies involved in the production of agricultural products, fertilizers and agricultural chemicals, farm machinery, and packaged foods and meats. Canadian stocks held include Nutrien, Tyson Foods, and Rogers Sugar.

Around 84.44% of the stocks held are from the U.S., while 9.44% are from Italy, 3.06% are from Canada, and 2.70% are from Israel. COW currently has AUM of $305 million, an MER of 0.72%, and pays a small distribution yield of 0.68%.

The Foolish takeaway

If you have a strong investment thesis around the global water or agricultural industry, buying CWW or COW may be a good way to express that view. By doing so, you’re making an explicit bet that either will outperform the broad market. While this could occur during some market cycles, you should also be ready for periods of underperformance and high volatility.

Neither of these ETFs are particularly diversified, so you’ll be taking on more risk compared to an index fund. That being said, If you are bullish on water or agriculture and have a long-term perspective, CWW or COW could be excellent ETFs to buy and hold.

Should you invest $1,000 in Barrick Gold right now?

Before you buy stock in Barrick Gold, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Barrick Gold wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool recommends Nutrien Ltd.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

A meter measures energy use.
Dividend Stocks

Fortis Stock: Buy, Sell, or Hold Now?

Fortis is up 11% in 2025. Are more gains on the way?

Read more »

protect, safe, trust
Dividend Stocks

3 Defensive Sectors Every Canadian Investor Should Consider Today

With volatility rising due to a potential global trade war, here are three defensive sectors to invest in today.

Read more »

A plant grows from coins.
Dividend Stocks

2 Canadian Dividend-Growth Stocks to Buy on the Cheap

TD Bank (TSX:TD) and another fantastic TSX dividend stock could surge high in summer.

Read more »

Investor wonders if it's safe to buy stocks now
Dividend Stocks

This 6.3% Dividend Stock Is a Must-Buy as Trump Tariffs Hit Canada

This dividend stock is a winner, especially amidst Trump tariffs that could send energy companies for a whirl.

Read more »

A worker gives a business presentation.
Dividend Stocks

3 Stocks I’d Buy With $10,000 Whenever They Dip in Price

Buying the dip in the right TSX stocks can help you leverage a market downturn and accelerate your long-term wealth…

Read more »

voice-recognition-talking-to-a-smartphone
Investing

Telus: Buy, Sell, or Hold in 2025?

Telus has been on a downward trend for three years. Is the stock now oversold?

Read more »

Hourglass and stock price chart
Dividend Stocks

Where I’d Put $50,000 Right Away in Top Canadian Stocks for Growth and Income

TSX dividend stocks such as Savaria and CNQ are top choices for investors looking for growth and income in 2025.

Read more »

data center server racks glow with light
Tech Stocks

Shopify vs. Constellation Software: Where I’d Allocate $8,000 for Tech Exposure

Shopify (TSX:SHOP) stock and another tech play look like bargains right now.

Read more »