With the completion of a close presidential election, roughly half of us are likely disappointed regardless of the winner. To counter the post-election blues, I identified some “happy” ETF themes to consider for investment. The fun part of this exercise is that it got me thinking about some things that make me happy. As you read these ETF categories, I hope thinking about them makes you happier as well!
Pets
Pet ownership can be a huge source of happiness. In a recent survey by the American Psychiatric Association and the American Veterinary Medical Association, 84% of participating pet owners said that their pets mostly helped to improve their mental health. In addition to providing companionship, the physical activity resulting from walking or playing with a pet can also help combat anxiety and reduce depression.
Thanks to the increased focus on pets during the pandemic due to more people working from home, the pet industry is booming. According to Michigan State University, the pet industry added $303 billion to the economy last year, representing an increase of 16% over the prior year. As pet owners know, people spend a lot on their pets, regardless of economic conditions.
The ProShares Pet Care ETF (PAWZ) is a way to play this investment theme. Although it is up a modest 7.6% YTD, it has a one-year return of almost 35%. The fund’s top holdings include pet medicine company Zoetis, dog food maker Freshpet, and e-commerce pet product retailer Chewy. PAWZ has around $65 million in assets and a 50-basis-point expense ratio.
Health and Wellness
Good health is another key to happiness, and there are many health and wellness ETF themes to consider. GLP-1 drugs now are not just an obesity treatment but have indications for other health problems such as heart disease, Alzheimer’s, and addiction. There is a trio of ETFs targeting exposure to this theme: the Amplify Weight Loss Drug & Treatment ETF (THNR), the Roundhill GLP-1 & Weight Loss Drug ETF (OZEM), and the Tema GLP-1 Obesity and Cardiometabolic ETF (HRTS).
Beyond the positive medical ramifications of these drugs, Goldman Sachs expects the GLP-1 drug market to grow to as much as $130 billion by the end of the decade, up from the firm’s 2023 forecast of $100 billion. Such an increase could grow the domestic GDP by 1%.
Another “feel good” healthcare ETF to consider is the Simplify Health Care ETF (PINK). The ETF provides actively managed thematic exposure to cutting-edge segments of the healthcare sector, ranging from biotech to gene therapy. Besides racking up some strong performance in the category for investors, up 16.3% YTD, Simplify donates the fund’s net proceeds to the Susan G. Komen Foundation annually.
Retail Therapy
There is always retail for those looking for a different kind of therapy. The University of Michigan revised its October consumer sentiment survey above its preliminary reading of 70.5. It was the third month in a row that the index ratcheted higher, hitting its highest level in a six-month period. That aligns with the U.S. Census Bureau recording a 1.4% increase in retail sales over last year and a 7.1% gain for nonstore retailers. Increasingly, more shoppers are doing their online retail therapy, which bodes well for a strong holiday season. Adobe Analytics forecasts a record holiday season of $240.8 billion for online retailers, up 8.4% over last year.
Top ETFs benefiting from the online retail trend include the Global X E-commerce ETF (EBIZ), the Amplify Online Retail ETF (IBUY), the First Trust S-Network E-Commerce ETF (ISHP), and the ProShares Online Retail ETF (ONLN). It has been a strong year for online relative to traditional retail, with all these ETFs up double-digits versus the paltry 6% YTD return for the SPDR S&P Retail ETF (XRT).
Music and Entertainment
Music and entertainment are two more happy themes to consider. Several ETFs are focused on media themes. If music provides you solace, the MUSQ Global Music Industry ETF (MUSQ) provides exposure to the global music industry.
Or suppose you would rather camp out on your couch and game your way to virtual happiness. In that case, there are several video game-themed ETFs, including the VanEck Video Gaming & Esports ETF (ESPO), the Global X Video Games and Esports ETF (HERO), and the Roundhill Video Games ETF (NERD).
Travel Plans
If this election cycle has you needing a vacation to restore your sanity, travel is another “happy” theme to consider. The Defiance Hotel, Airline, and Cruise ETF (CRUZ) covers all the travel bases and is up 14% YTD. Suppose you’re looking for something more specific. In that case, there is the U.S. Global Jets ETF (JETS), which is up over 20% this year, benefiting from the resumption of air traffic trends post the pandemic, including business travel and meetings in real life (IRL). That makes extroverts happy and introverts less so.
Happy Workplace
If you can’t go on vacation, the Harbor Human Capital Factor suite of ETFs partnered with Irrational Capital to identify companies with positive corporate cultures that emphasize the welfare of their employees. The underlying thesis is that happy employees drive better company performance. There is the all-cap Harbor Human Capital Factor Unconstrained ETF (HAPY), the Harbor Human Capital Factor US Large Cap ETF (HAPI), and the Harbor Human Capital Factor US Small Cap ETF (HAPS) for all your market cap moods.
Happy With ETFs
Based on a record $820 billion in YTD flows, the ETF structure seems to make investors very happy indeed. ETFs are on pace to surpass inflows of $1 trillion this year. Fueling a lot of that happiness has been innovation and more choices in the ETF wrapper, from crypto to single-stock leveraged/inverse to liquid alternatives and more option options. There is a lot to be happy about in ETF land, and I am grateful for that.
VettaFi LLC (“VettaFi”) is the index provider for THNR, IBUY, ISHP, and MUSQ, for which it receives an index licensing fee. However, THNR, IBUY, ISHP, and MUSQ are not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of THNR, IBUY, ISHP, or MUSQ.
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