“To Err is Simian” Lancelot Link, Secret Chimp
Alas, Uncle Lancelot saw it coming: the stock-picking chimp violated his cardinal rule – “don’t fall in love with a stock” in this case, cryptocurrencies.
So I’m back writing this column because I need the $ and since you’re reading, you probably do too!
So let’s step back from all the foolishness out there on Wall Street – like self-driving cars, money-losing unicorns, spaceships to Mars, co-working spaces (i.e. real estate with an extra middleman and free beer) and even gold, the icon of defensive investing.
Smart chimps know that when the environment, the economy, and Washington, DC are in the gutter – we all still need to eat and drink. Neither gold nor space travel will help you when you are hungry or thirsty.
But forget fake meat and sugary/CBD beverages, the Stock Picking Chimp trusts his gut to focus on water and fresh food and vegetables as core investment themes for my portfolio. Today’s column will unveil our first new investment – focused on the former.
WATER, WATER EVERYWHERE
Starting with the nectar of life, water, SPC recommends investing in the growing demand for water around the globe. Rather than picking a few stocks, I’m recommending the Invesco S&P Global Water Index ETF (stock symbol CGW) to get you exposure to long-term demand for water around the world.
Now you may wonder why the “Stock” Picking Chimp is recommending an “ETF” or Exchange Traded Fund? Well, ETFs are a diversified way to participate in many different investment themes, particularly if you are just getting going with a small amount of money. (Side note: because ETF’s did not exist when I started my career, being the “Stock and ETF” picking chimp was just not an option.)
If you are wondering what an ETF is – well, it is a pool of capital that grows or shrinks as money flows into it or out of it as investors buy and sell shares in the ETF. As shares are purchased, the ETF takes the pool of money and buys a slate of stocks that match the ETF’s focus, in this case, companies involved in the water industry. So with one share of an ETF, you are able to participate across many different companies/stocks, not just one. Your ETF investment will appreciate over time as the stocks it tracks go up, and it’s hard to see how water and water-related companies won’t thrive over the long term.
The Invesco S&P Global Water Index ETF is a pool of investment capital that seeks to match the performance of the S&P Global Water Index, and you are probably asking what is that? Well the S&P Global Water Index is a group of 50 companies selected by S&P from around the world, each of which is involved in water-related businesses. The index is split equally between Water Utilities & Infrastructure and Water Equipment & Materials. Roughly half of the companies in the index are from the U.S.
Invesco seeks to match the S&P Index by buying shares of each of the Index’s components in its Global Water Index ETF. Because it is just copying S&P (which is not plagiarism in the crazy world of Wall Street) it charges lower fees than traditional mutual funds or other accounts. Keeping an eye on fees will be a recurring them from SPC!
SMART CHIMP PICK
To give you a flavor for what you would own in shares of CGW, here are the top 10 holdings in S&P’s Global Water Index as of September 30, 2019:
Stock Symbol Sector
American Water Works AWK Utilities
Xylem Inc XYL Industrials
Geberit AG Reg GEBN Industrials
Danaher Corp DHR Health Care
Veolia Environnement VIE Utilities
IDEX Corp. IEX Industrials
Halma HLMA Information Technology
Aqua America Inc. WTR Utilities
United Utilities Group Plc UU Utilities
Algonquin Power & Utilities Corp. AQN Utilities
Returning to this column is proving more taxing than I had imagined, so I will leave it there. This is our first purchase, and SPC is suggesting that CGW represent 10% of your total portfolio when we are finished. So if you have 10 bananas to invest – use only one for the CGW position!
Until next time –
James Vancey, The Stock Picking Chimp
Investments without the Monkey Business
DISCLAIMER: Do not take investing advice from a chimpanzee. Talk to your investment adviser or your psychiatrist.