In what may be a surprise to some investors, the ProShares Pet Care ETF (CBOE: PAWZ) is holding up well, relatively speaking, amid a trying start to March for U.S. equities. With one week of March in the books, PAWZ has been about half as bad as the S&P 500 to start the month.
PAWZ includes sectors such as veterinary pharmaceuticals, diagnostics, services, and product distributors; pet and pet supply stores, and pet food and supply manufacturing. Healthcare and retail stocks make up a significant portion of the PAWZ roster and the ProShares ETF has the potential to outperform traditional funds tracking those sectors.
While PAWZ has been somewhat steady or less bad than broader benchmarks in recent weeks, the long-term thesis for the pet care ETF remains compelling.
“The pet care market has grown at an impressive rate due to technological advancements and various pet care centers in many countries,” according to Market News and Research. “There are various new apps which have led to a major shift in the pet care- from traditional care to mobile-based technology. Even the grooming of pets is taken care of by mobile-based apps. Nowadays, the pets are considered as a status symbol for elite classes and a companion in nuclear and middle class families.”
PAWZ seeks investment results, before fees and expenses, that track the performance of the FactSet Pet Care Index. The fund seeks to invest substantially all of its assets in the securities included in the index. Under normal circumstances, the fund will invest at least 80% of its total assets in the component securities of the index. The index consists of U.S. and non-U.S. companies that potentially stand to benefit from interest in, and resources spent on, pet ownership.
Importantly, PAWZ is very much levered to the theme of shoppers transitioning to online venues away from brick-and-mortar stores.
“By now, it’s a familiar tale: Online sales of pet products (along with just about every other kind of product) continue to soar, growing healthily each year,” reports Debbie Phillips-Donaldson for PetFoodIndustry.com. “In 2015, internet sales of pet products hit US$3.17 billion, a 7% share of the U.S. pet market. By 2019, that figure had leaped to US$12.25 billion, a 22% share, Sprinkle said. Packaged Facts projects e-commerce’s share to hit at least 24% by 2024, reaching US$18.21 in sales.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.