With markets again being roiled by international trade tensions, assessing strategies that could prove immune to trade disruptions is an idea to consider. Pet care and the ProShares Pet Care ETF (CBOE: PAWZ), the first and still the only dedicated pet care exchange traded fund, fit the bill.
PAWZ includes sectors such as veterinary pharmaceuticals, diagnostics, services, and product distributors; pet and pet supply stores, and pet food and supply manufacturing. While PAWZ has followed the broader market lower in recent days, the fund remains higher by 17.57% year-to-date and its recent declines could belie opportunities for investors to decrease China exposure in their portfolios.
IDEXX Laboratories, Inc. (NASDAQ: IDXX) is one of the largest holdings in PAWZ and that medical diagnostics firm is higher by more than 44% this year.
IDEXX is “an industry leader in veterinary diagnostics research and development,” said ProShares. “IDEXX provides pet wellness diagnostics, including tests for parasites, pancreatic and cardiac health.”
PAWZ seeks investment results, before fees and expenses, that track the performance of the FactSet Pet Care Index.
At the end of the first quarter, more than half of the components in PAWZ were veterinary pharmaceuticals makers, veterinary diagnostics companies or distributors of veterinary supplies and products. The fund also features some exposure to the retail side of the pet industry with weights to pet stores, makers of pet food and related entities. Data confirm that pet healthcare is big business and a potentially potent long-term theme for PAWZ.
More Compelling Data
“Pets today are more than companions—they are part of the family,” said ProShares. “And caring for them is big business. Global pet care industry sales are expected to grow to over $200 billion annually by 2025. The companies driving this extraordinary growth typically fall into one of several broad categories: pet health, pet supplies and stores, or pet food. Who are some of these companies and what kind of services do they provide?”
Another stock that could buoy PAWZ is Chewy Inc (CHWY), a subsidiary of PetSmart, which joined the ETF in June.
Chewy has “more than 45,000 products available, provides cost-effective overnight delivery of pet supplies to approximately 80% of the United States (~100% in two days) through seven fulfillment centers,” according to ProShares.
FreshPet Inc. (NASDAQ: FRPT) is another PAWZ holding with interesting long-term potential. That company is a leader in the fresh pet food category.
FreshPet “products distributed in over 10,000 stores in North America, including natural food retailers, pet specialty stores and major retailers,” notes ProShares.
For more investment opportunities, visit our Core ETF Channel.