When markets sell off and headlines scream recession, inflation, or crisis, most investors either freeze or flee. But sometimes, the smartest move is to step back and look at what people will always need, no matter what the economy is doing.
Water and food are two of the most basic necessities on the planet. They don’t go out of style, and demand doesn’t disappear in a downturn. While these sectors don’t always get the spotlight, they can be powerful medium-term investments during periods of uncertainty.
The following two exchange-traded funds (ETFs) offer exposure to businesses that keep global water and food systems running, without needing you to own farmland or speculate on commodity prices.
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Investing in water
iShares Global Water Index ETF (TSX: CWW) is a simple way to invest in the global water system. It holds +60 companies involved in water utilities, infrastructure, equipment, and treatment.
But it’s important to understand what this fund is not. You’re not investing in water as a tradable commodity. There’s no speculation on freshwater rights or hoarding of supply. Instead, this ETF focuses on companies that keep water systems functioning.
That includes pump manufacturers, flow control firms, water utility operators, infrastructure suppliers, and industrial water treatment businesses. The stocks in CWW make things like pumps, valves, pipes, filters, sewage systems, and more.
Think of it as a basket of specialized industrial and utility companies that benefit from investments in water infrastructure. Whether cities are upgrading pipes or factories need cleaner systems, the demand for water solutions tends to be steady and recession-resistant.
CWW has been around since 2007 and charges a 0.66% fee, which feels a little high by modern standards. Still, the ETF has earned that fee with an annualized return of 10.77% over the past 10 years. That’s solid performance for something that often flies under the radar.
Investing in agriculture
iShares Global Agriculture Index ETF (TSX: COW) gives you exposure to the global food system, but you’re not buying farmland or direct exposure to grain prices here either. It holds +30 companies selected by an index.
This ETF focuses on the backbone of modern agriculture: agri-chemicals, farm machinery, and food processing. Think seed technology, fertilizers, tractors, pesticides, and the systems that move food from field to table.
While it doesn’t cover the entire food supply chain, it captures the core drivers of agricultural productivity. And when inflation spikes, food-related companies often get a tailwind. COW showed that in 2021 and 2022, respectively.
Launched in 2007, COW also comes with a relatively high 0.71% fee. But like CWW, it has delivered respectable long-term performance with a 9.05% annualized return over the past decade.
