FIW VS PIO: A Comprehensive Comparison of ETFs
When it comes to investing in water-related assets, two ETFs often stand out: FIW (First Trust Water ETF) and PIO (Invesco Global Water ETF). These investment vehicles have specific strategies, fees, and risk profiles that you need to consider. This blog post aims to provide an in-depth comparison of FIW Vs PIO, helping you make a well-informed investment decision.
FIW Vs PIO: The Issuers Behind the ETF’s
First Trust Advisors L.P. manages the First Trust Water ETF (FIW). The firm is renowned for its specialized thematic ETFs. FIW aims to track the ISE Clean Edge Water Index, offering investors exposure to companies involved in water-related businesses.
Invesco is the company behind the Invesco Global Water ETF (PIO). Invesco is a global investment management firm that specializes in various financial instruments. PIO targets the NASDAQ OMX Global Water Index, focusing on global companies that create products designed to conserve and purify water.
Investment Objectives: FIW Vs PIO
FIW aims to offer investment returns that closely replicate the performance of the ISE Clean Edge Water Index. This index focuses on U.S. companies with a predominant share of their business activities in the water sector. On the other hand, PIO aims to replicate the NASDAQ OMX Global Water Index, which includes companies involved in water utilities, infrastructure, and equipment, but on a global scale.
FIW overlap FIW VS PIO: A Comprehensive Comparison of ETFs
Asset Allocation: How FIW and PIO Differ
FIW mainly allocates assets in U.S.-based water companies. The index is composed of 36 companies, with the top sectors being water utilities and infrastructure. PIO, however, has a more global approach, incorporating companies from multiple countries and sectors. This makes PIO more diversified in terms of geographic allocation.
Cost is a vital factor in choosing an ETF. FIW comes with an expense ratio of 0.55%, which is slightly lower than PIO's 0.75%. This can make a significant difference in the long-term investment outcomes.
Performance: Tracking FIW and PIO Returns
Performance is one of the most scrutinized aspects when comparing ETFs. FIW has generally outperformed PIO in the past couple of years, delivering higher returns. However, PIO offers a more diversified portfolio, which could be advantageous in specific market conditions.
In terms of liquidity, FIW generally has higher daily trading volumes than PIO. Higher liquidity allows for easier entry and exit, which could be crucial for short-term traders.
Risks: Weighing the Downsides of FIW and PIO
Both FIW and PIO carry market risks, but PIO’s international exposure could make it more susceptible to currency and geopolitical risks. On the other hand, FIW’s concentration on the U.S. market might make it more volatile in response to domestic economic conditions.
Conclusion: FIW Vs PIO - Which One Suits You?
While FIW and PIO both offer unique opportunities for investing in the water sector, your choice between the two should align with your investment goals, risk tolerance, and geographical preference. FIW offers a more focused approach to U.S. water-related companies, while PIO provides broader international exposure. The difference in fees and performance could also be deciding factors in your investment decision.
By understanding the issuers, objectives, and finer points of these ETFs, you'll be better equipped to choose between FIW and PIO. Choose wisely and invest smartly.
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