Looking for a thematic ETF with a durable underlying theme and one that’s proving steady in a trying 2020 environment? Consider the ProShares Pet Care ETF (CBOE: PAWZ).
PAWZ, the first and only dedicated pet care, and retail ETF 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.
Year-to-date, PAWZ is barely lower and is higher by 41% off its March lows. That move isn’t a fluke as the fund is underpinned by solid, long-term fundamentals.
PAWZ Pushes Higher
“As equities seek to regain their footing following COVID-19 related volatility, investors may want to consider investments in industries that have been downturn resistant,” according to ProShares. “With more and more people treating their pets like family, the pet care industry has historically shown such resilience, indicating that regardless of the economy, people spend money on their pets. Indeed, in the United States, the pet care industry has seen twice the percentage growth of GDP since 2007, increasing even during the Great Recession.”
PAWZ is also at the forefront of some important shifts in consumer behavior. Shopping and consumer trends are changing as more buyers rely on the convenience of online retailers to quickly and easily meet their discretionary needs. As the retail landscape changes, investors can also capitalize on the trend through ETFs that target the e-commerce segment. That benefits Chewy and other PAWZ components with e-commerce exposure.
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.
Seven out of 10 U.S. households today have pets, more than have children, and owners are providing pets with premium foods, luxury services, state-of-the-art health care, insurance policies, and more. The pet care industry could reach $203 billion in global sales by 2025. It has grown steadily every year since 2001, even during the Great Recession.
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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.