Being a pet owner is rewarding on an emotional level. Financially speaking, not so much. However, that trend could be changing thanks to the ProShares Pet Care ETF (CBOE: PAWZ), which gives pet owners and investors alike a credible avenue for profiting from the booming pet care industry.
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.
“The pet care business has seen twice the percentage growth of GDP in the U.S. since 2007, including through the Great Recession,” according to new research from ProShares. “And those closest to the industry don’t see any signs that pet owners will become any less willing to open their pocketbooks on pet care.”
First Mover Advantage
PAWZ is the first ETF of its kind to cater to the pet care industry. The ETF idea tries to capitalize on the pet care industry that is poised for even further growth as data collated from Grand View Research and other pet industry trends show that sales could reach upwards of $203 billion by the year 2025–a growth of 54% in less than 10 years.
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.
“Consider the pet pharmaceuticals business. Zoetis reported 17% growth in its companion animal revenue for 2018[1]. Compare that to 2.9% GDP growth in 2018 and it is just one example of how the pet care business is growing much more rapidly than the broader economy,” according to ProShares. “In pet pharmaceuticals, there’s no real threat of generics pressuring the business of drugmakers, or insurers and regulators trying to keep a lid on pricing. There is no Medicaid for dogs and cats, and pet owners are increasingly willing to spend money on giving their animals the very best in care.”
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