The ProShares Pet Care ETF (PAWZ), the first and still the only dedicated pet care exchange traded fund, is up more than 18%, dispelling any notion that it is no more than just another thematic ETF.
PAWZ includes sectors such as veterinary pharmaceuticals, diagnostics, services, and product distributors; pet and pet supply stores, and pet food and supply manufacturing. Heavy on companies with exposure to the pet healthcare industry, PAWZ is beating the largest traditional healthcare ETF by a margin of more than 2-to-1 this year.
Lending credibility to the long-term thesis for pet care investing and PAWZ are scores of strong fundamental factors.
“Today, roughly 68% of U.S. households have pets, up from 56% in 1988, according to the American Pet Products Association (APPA). In fact, more households have pets than have children,” said Simeon Hyman, global investment strategist at ProShares in a post on FactSet, the index provider for PAWZ.
A Powerful Thesis
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.
Demographic trends underpin the PAWZ thesis.
“Baby boomers, the largest generation in history, are entering a new phase of life as empty nesters and retirees,” said Hyman. “As this occurs, they’re becoming pet owners in greater numbers. A decade ago, only 34% of people over 70 had pets. But as boomers began to cross into their 70s, the percentage quickly jumped to 40%.”
Millennials are another important demographic group for the PAWZ thesis.
“Millennials, who will become our nation’s largest generation, have also embraced pet ownership,” said Hyman. “Many millennials are becoming pet owners before, or even instead of, having children. And for those who don’t currently own a pet, 43% say they want one in the future. In addition, when millennials take major steps, like purchasing homes, their pets’ needs are quite often a driving force behind their choices.”
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