Market Overview

An ETF For Your Furry Friend

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An ETF For Your Furry Friend

National Pet Day is Thursday, April 11. As owners know, pet ownership is rewarding, but, in many cases, not cheap.

While the comfort, support and good times associated with pet ownership pay emotional dividends, the financial aspect of owning a dog, cat, horse or another animal is usually at an outgoing cost. Meaning pet owners send money out the door to care for their pets.

Investors and pet owners alike can flip that script with the ProShares Pet Care ETF (CBOE: PAWZ), the first exchange traded fund dedicated to companies in the pet care industry. PAWZ, which debuted last November, tracks the FactSet Pet Care Index.

While PAWZ fits the bill as a niche ETF, data confirm the niche of pet ownership in the investment landscape is relevant and the fund's performance has been admirable as highlighted by a year-to-date return of 11.11 percent.

Why It's Important

Indeed, data confirm that the pet business is big business.

“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,” according to ProShares. “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.”

Additional data points support the notions that pet owners treat their furry friends as members of the family. In fact, more U.S. households have pets than they have children.

“Eighty percent of pet owners care for their pets like children, 79% believe their pets should eat the same quality food they do and nearly half have purchased clothing or fashion accessories for their pets,” said ProShares. “Pet ownership has expanded to 84.6 million U.S. households—more than double the 35 million households that have children.”

The underlying index for PAWZ held 24 stocks at the end of 2018, 23.71 percent of which are veterinary pharmaceuticals companies. Over 29 percent of the index's combined weight is allocated to supply retailers and veterinary diagnostics companies.

What's Next

How investors treat PAWZ and its components going forward remains to be seen, but there is no denying the pet care industry is growing.

“Pet care industry sales, which stood at $132 billion globally in 2016, are projected to grow to $203 billion by 2025,” according to ProShares.

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