First Trust Water ETF

First Trust Water ETF (FIW) is an index fund that holds the 36 US-listed companies in the ISE Clean Edge Water Index, which covers drinking water and wastewater businesses ranging from utilities to makers of pipes, pumps and testing equipment. Its 0.50% expense ratio is below the 0.55% average for similar water funds. Its tiered weighting resets each stock to 4% or less at every rebalance, so no single company dominates.

• Over the year to Oct 27, 2026, FIW returned -3.2%, 4th of 7 among similar funds.
• Its 5-year annualized return was +5.2% and its 10-year +12.6%.
• In the 2020 COVID crash it fell 36.6% and regained its old high 6.5 months after the low.
• Its worst full calendar year was 2008 (-29.4%); its best was 2019 (+37.4%).
• The deepest fall in its price history was 52.7% (Jun 5, 2008 to Mar 9, 2009), recovered by Apr 1, 2011.

As of Jun 30, 2026, the fund held 37 securities; the ten largest made up 40.57% of assets.

• Over the three months to Jun 30, 2026, investors withdrew a net $31.4M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +3.91%, -3.22%, +5.76%.

FIW tracks the ISE Clean Edge Water Index, which Nasdaq owns and calculates. The fund normally keeps at least 90% of its net assets in the index's stocks. To qualify, a company must trade on a qualifying US exchange and earn a substantial share of its revenue from drinking water and wastewater, as defined by Clean Edge. That covers four groups: utilities and distributors; infrastructure such as pumps, pipes and valves; treatment and testing; and services such as consulting, construction and metering. Stocks must also pass size, trading-volume and seasoning tests. Seasoning means a minimum time listed on an exchange.

The qualifying stocks are ranked by market value (share price times shares outstanding), and the top 36 make the index. Each one then gets a weight based on its rank, not on its size. Ranks 1–10 get 4% each, 11–15 get 3.5%, 16–20 get 3%, 21–30 get 2% and 31–36 get 1.25%. Weights drift between rebalances. As of June 30, 2026, the largest holdings were Waters at 4.9%, Agilent at 4.5% and Masco at 4.1%, and the top 10 made up 40.6% of the fund.

The index is rebalanced and reconstituted twice a year, and portfolio turnover was 14%. The fund uses no leverage, options or derivatives. As of March 31, 2026, the prospectus said the fund had significant investments in industrials companies, and about 95% of assets were in US companies as of June 30, 2026.

• FIW charges 0.5% a year, versus an average of 0.55% for the similar funds below (3rd of 7, cheapest first).
• Of that, 0.4% is the management fee; the rest covers other fund expenses.

FIW is a concentrated bet on one industry and has fallen more than 50% at its worst, so it fits best as a small add-on to a broad core.

FIW could add a focused slice of water-related companies to a stock portfolio, but it behaves like a stock fund, not a bond fund or a steady utility fund. It fell 52.7% from June 2008 to March 2009 and did not regain its peak until April 2011. It dropped 36.6% in the 2020 COVID crash and recovered by October 2020. It fell 27.5% in 2022 and did not recover until December 2023. Its worst calendar year was 2008, when it lost 29.4%. Someone who had to sell shares during one of those stretches would have locked in losses. The fund offers little income: its trailing 12-month yield was 0.73% as of October 27, 2026, paid quarterly. Its 0.50% expense ratio is below the 0.55% peer average. Past results don't predict future returns, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.