The BlackRock fund—the iShares Global Water ETF (ticker DH20@LN)—invests in everything from water utilities and pump manufacturers to companies that improve water efficiency. The top five holdings in the $2 billion exchange-traded fund include American Water Works Co., Xylem Inc., Essential Utilities Inc., Ferguson Plc and Geberit AG. Moufti said the fund reflects the growing concerns about water scarcity in the world’s richest economies—and it's a danger that may not be fully priced into the market.

It’s about “investing in water equipment like pumps, or improving piping to reduce water losses or enhancing waste water treatment,” Moufti said.

So far this year, the BlackRock ETF has dropped 28%, slightly less than the S&P Global Water Net Total Return Index. The fund advanced at an annual rate of 8.3% over the past 10 years.

“Thematic investment is long term, and the rationale behind setting up this fund is that we see it as a long-term structural growth opportunity,” Moufti said. “We have an increase in population and water demand, but limited resources. And positive developments on regulations and funding will continue to support this sector.”

In the US, the Bipartisan Infrastructure Law has committed more than $55 billion to the modernization of water infrastructure over the next five years. But that’s just a small fraction of the level of investment that may ultimately be needed, according to analysts at Goldman Sachs Group Inc. The Wall Street bank estimates that as much as $900 billion of incremental spending may be required to address aging US water pipes. About 16% of the system is already at, or beyond, its average useful life of 75 to 100 years.

In Europe, at least 100 billion euros ($101 billion) of investment is needed annually to upgrade water supply and water treatment across EU member states, according to a report by the OECD.