Best water ETFs for Belgians in 2025

Why invest in water?

Water is a fundamental necessity with growing demand

The global population and economy are growing, but clean freshwater is limited. Many areas face water scarcity and stress. It's said that water and wastewater treatment market is set to double in the future. This shift shows a huge need for investment. Companies that tackle water problems with purification tech, better infrastructure, or smart distribution can grow fast. The world is spending more on securing clean water so you can be part of this shift.

It's a trend

Clean water isn't just an environmental or social goal; it's a human right recognised by the United Nations. The critical role of water ensures that the sector typically receives steady funding, even in difficult times. People need water no matter the economy. So, water utilities and infrastructure companies see steady demand. At the same time, water technology firms enjoy innovation and regulatory support. This blend of stability for utilities and growth potential for water tech has led many to label water a "mega-trend" investment theme. It's like themes like AI or defence, but focuses on a resource that everyone needs.

Impact and sustainability angle

Investing in water can also align with sustainability goals if that means a lot to you. Many water ETFs invest in firms that benefit from water-related businesses. They also help tackle global water issues. Examples include efficient irrigation, desalination and wastewater recycling. Water investments let investors support the environment. They can help tackle water scarcity and improve quality, all while seeking financial returns. The water sector offers a chance to invest in a vital resource. It has both defensive and growth features.

How to select the best water ETFs

Not all ETFs are the same. Niche thematic ETFs, like those focused on water, come with special factors to consider. Here are key criteria for picking a good water ETF, especially for Belgian investors:

Accumulating (tax-efficient for Belgians)

ETFs offer two different ways of handling dividends: distributing and accumulating. Distributing ETFs pay you dividends. Accumulating ETFs reinvest those dividends in the fund. As a Belgian investor, an accumulating ETF is usually the smarter choice. Belgium charges a 30% tax on received dividends. This tax applies to dividends from ETFs as well as individual stocks. Choosing an accumulating fund means you skip those taxable payouts. The ETF retains any dividends and reinvests them within the fund. That means no 30% haircut each time a stock in the fund distributes cash. Over time, this tax efficiency can provide a substantial increase in your returns.

Diversified across the water sector

“The water sector” might seem narrow, but it includes various companies. These range from utilities that supply water to industrial firms that make pumps and pipes. It also covers tech companies that focus on purification or desalination innovations. A strong water ETF should include a wide range of water-related companies. It’s best if these companies come from different industries and regions. This helps to spread risk. Diversification matters. A single company or sub-industry can run into trouble. For instance, a utility may deal with new regulations. Also, a water tech firm could see its new product fail. Investing in many companies helps an ETF lessen the impact if one holding does poorly. Check the ETF’s underlying index. Does it feature dozens of stocks from around the world? The S&P Global Water index, followed by a popular ETF, includes 50 top water companies worldwide. This gives you access to a diverse range of water utility, infrastructure, and technology firms.

Domiciled in Ireland or Luxembourg

Both countries have special tax treaties. It's cheaper to invest in ETFs based in Ireland or Luxembourg. You can recognise these by their ISIN code, which starts with "IE" (Ireland) or "LU" (Luxembourg). Although we've also highlighted one ETF below that is registered in France.

Low cost (TER)

Cost is a crucial factor for any investment. Lower fees mean you keep more of the returns. Thematic ETFs, such as water, often have higher expense ratios than broad market ETFs. However, you should still look for the cheapest option that suits your needs. In the water ETF space, annual fees (TER, or total expense ratio) typically range from around 0.35% up to about 0.65%. All else equal, a lower TER is better for your long-term returns. When you compare two water ETFs that track similar companies, look at their TERs. Pick the option with lower fees. Also, consider other factors like diversification. Every 0.1% saved in fees per year can add up when compounded over decades. Luckily, some new water ETFs offer fees between 0.35% and 0.50%. This is cheaper than older funds that charge about 0.65%.

Enough size and track record

It’s also wise to consider the fund size and age. Larger ETFs (in terms of assets under management) tend to be more stable and less likely to be shut down. A reasonable guideline is to look for ETFs with at least €100 million in assets. A big fund has proven its popularity and can benefit from economies of scale. Very small funds, like those under €25m, may find it hard to attract investors. If they stay small, the provider might close the fund and liquidate it. This can be inconvenient. You would get your money back, but you could face some costs or tax events. A good track record is important. An ETF that has been around for several years provides a performance history to check. This history shows the provider's commitment to the fund.

Physical replication

Another criteria to consider is how the ETF replicates the index. ETFs can hold actual stocks, which is called physical replication. They can also use derivatives and swaps to track the index, known as synthetic replication. Physical replication is usually simple and avoids counterparty risk. However, synthetic replication may add some risk and complexity. This is because it depends on a swap contract with a bank.

The best water ETFs for Belgians in 2025

Now that we’ve covered what to look for, let’s dive into the top water ETFs available to Belgian investors:

iShares Global Water (IE000CFH1JX2)

This ETF lets you invest in the global water industry. It includes 50 of the biggest companies in water supply, infrastructure, and technology. It features familiar names like American Water Works and Xylem. Plus, it spreads your money across the U.S., Europe, Asia, and more. Managed by iShares (BlackRock), the fund has been around since 2007 and holds about €1.9 billion in assets. We list the version that reinvests dividends, which is better for Belgian investors. The annual fee is 0.65%, a bit higher, but you get a trusted and diversified fund in return. Here is how it has performed historically:

Amundi MSCI Water ESG (FR0010527275)

Amundi's MSCI Water ETF invests in water companies worldwide that follow strict sustainability standards. It centres on water technology and services. Its top holdings include Danaher, Thermo Fisher and Ecolab. These are companies known for lab equipment and water treatment solutions. The fund steers clear of companies with low ESG ratings or big controversies. This makes it a great choice for a "responsible" water investment. It’s been around since 2007, has about €1 billion in assets, and has a 0.60% annual fee. Just note that it pays out dividends (less ideal for Belgian investors) and uses a synthetic approach to track the index.

L&G Clean Water ETF (IE00BK5BC891)

L&G Clean Water invests in companies around the world working on clean water solutions. These companies include water tech, filtration, testing, and smart irrigation. It leans more toward mid-sized, innovative firms like Xylem, Pentair, and IDEXX, rather than big utilities. That focus gives it a more growth-oriented profile, which can mean more ups and downs. The fund reinvests dividends, charges 0.49% per year, and is physically backed. It’s a good pick if you want a water fund with a modern, tech-forward approach and don’t mind a bit more volatility.

Which water ETF to choose?

The cheapest ETF is the L&G Clean Water ETF at 0.49% per year. If you compare their historical performance, you can see that L&G Clean Water ETF comes out on top in terms of performance:

Water ETFs to look out for

Although these are smaller in size and don't have the historical data on Backtest, here are a couple more water ETFs to keep an eye out on:

Global X Clean Water (IE000BWKUES1)

Global X Clean Water invests in companies helping solve global water challenges. The ETF includes companies that treat wastewater, build water infrastructure, and improve water efficiency. Most of the 40 companies it holds are based in the U.S., with a few in Europe and emerging markets. Key names are American Water Works and Geberit. They focus on utilities and water tech firms. The fund is building up, so Belgians won't pay dividend tax. It has a 0.50% annual fee and has an "ESG" focus. It’s still small, with about €19 million in assets. So, it's worth watching. It offers a promising and balanced way to invest in clean water innovation.

Xtrackers MSCI Global Clean Water & Sanitation (IE0007WJ6B10)

This ETF targets companies that back the UN’s clean water and sanitation goals. This includes firms in water supply, wastewater treatment, and water technology. It includes about 70–80 companies of various sizes worldwide, offering you wide diversification. Launched in 2023, it’s the newest fund on the list and stands out with the lowest fee at just 0.35% per year. It’s growing, which is better for Belgian investors, and it physically holds all the stocks in the index. The main drawback is its small size. Only around €7 million in assets. So, it’s one to consider if you want a low-cost, sustainability-focused water investment.

Why you shouldn't invest in a water ETF

While investing in water sounds attractive, it’s important to know the risks too. Water ETFs may not ensure high returns. Consider these reasons before investing heavily in this theme:

Limited diversification

Water seems broad, but most water ETFs are quite focused. They often invest a lot in sectors such as utilities, industrial equipment, and water technology companies. This means your money isn't as spread out as with a global stock market ETF. If one sector or region struggles, for example, if U.S. water utilities underperform, the whole ETF could be impacted. Water investing doesn’t give you the same level of diversification that a world ETF does.

Higher fees

Thematic ETFs, such as those focused on AI or water, often cost more than basic global index funds. Water ETFs often have total expense ratios (TER) between 0.40% and 0.65%. In contrast, a global stock ETF can be as low as 0.10% per year. Over the long term, these higher fees can eat into your returns.

Performance can be disappointing

Water companies are essential, but that doesn’t always mean they’re good investments. Some water utilities grow slowly and have lower profit margins. Innovation in water technology can take time. It often requires big investments, and the returns are not always clear. At times, water ETFs have done worse than broader markets, such as the MSCI World index. Simply put: essential does not always mean profitable.

Water is highly regulated

Water supply is often tightly controlled by governments. Many water companies, especially utilities, must follow strict rules. These rules cover pricing, environmental standards, and service obligations. These regulations can limit profitability. Also, political choices like new taxes or rules could affect companies that deal with water.

Risk of overpaying for the theme

Water is viewed as a "hot" sector linked to sustainability and major trends. So, investors often rush in, driving valuations higher. Buying a water ETF when prices are high compared to earnings, known as "overvaluation," may lead to lower returns in the next ten years. It’s important to remember that no matter how important water is, it’s still possible to pay too much for the companies involved.

Curvo, a more diversified alternative than a water ETF

Fundamentally at Curvo, we believe in diversification across:

• Many different countries around the globe.
• Sectors and industries.
• Company size.

Due to this, the portfolios offered through Curvo should be built to stand the test of time. They should invest only in assets that are widely understood and that, through decades of research and usage, are predicted to earn significant returns over the decades to come. Concretely, this means index funds of stocks and bonds.

We believe that passive investing (also called "index investing") is the best strategy to guarantee long-term success. This follows from our conviction that the financial markets are efficient. Concretely, we think that investments shouldn't be timed based on market sentiment, or worse, feelings and emotions. Active investing, or trying to beat the market by outsmarting other players in the financial markets, is most often not worth the risk nor the additional cost to the investor.

Instead, we believe in a "buy-and-hold" strategy, in total alignment with a long term view. Some may call it unsexy, but we are convinced that good investing is boring. When you invest through a Curvo portfolio, you're investing in 7,500 companies including water related companies which will undoubtedly benefit from the growth of the water industry.

Learn more about how Curvo works.

Summary

We've explored how water ETFs work, what to look for when choosing one, and which options make the most sense for Belgian investors. Top picks include the L&G Clean Water ETF with its focus on innovative water technology companies and the iShares Global Water ETF with its solid track record. However, we've also seen why these specialised funds come with their own challenges: limited diversification, higher fees, and potential underperformance compared to broader market indexes. These factors highlight why water ETFs might work better as a satellite investment rather than your core holding.

The most important thing for long-term investors is building a diversified, low-cost portfolio that can weather all market conditions. If you're looking for a simpler approach than piecing together various thematic ETFs, you might want to consider a globally diversified index portfolio that already includes water companies alongside thousands of other businesses. What's your next step in building your investment strategy? Consider checking out our beginner's guide to passive investing to learn more on the topic.