“Own what you know” is a frequently touted phrase within the investment community. The implication is that investors should invest in industries and businesses with which they are familiar. With 70% of U.S. households owning pets,1 it would follow that a lot of people “know” the pet care industry and may want to consider making it part of their investment portfolios.
The pet care industry has had strong historical performance, and investing in it could present a significant opportunity. As measured by the FactSet Pet Care Index, the pet care industry has outperformed the S&P 500 by a cumulative 48.1% since the end of 2019.2 Looking forward, the global pet care industry is projected to grow from $232 billion in 2020 to $350 billion in 2027.3 With that kind of anticipated growth, why wouldn’t you turn buying treats for your pet into a potential treat for your investment portfolio?
Source: Bloomberg, data as of 6/30/2021
|Year to Date||1 Year||Fund Inception|
|ProShares Pet Care ETF NAV Total Return||13.14%||64.26%||30.80%|
|ProShares Pet Care ETF Market Price Total Return||13.22%||64.24%||30.90%|
|FactSet Pet Care Index||13.63%||65.69%||31.61%|
As of 06/30/2021. PAWZ’s operating expenses are 0.50%.
The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost.
Current performance may be lower or higher than the performance quoted. Standardized returns and performance data current to the most recent month end may be obtained by visiting ProShares.com. Index performance is for illustrative purposes only and does not represent fund performance.
Index returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged, and one cannot invest in an index. Past performance is not a guarantee of future results.
For those less familiar with some of the names in the pet care industry, below are the top five holdings of the FactSet Pet Care Index. The index is designed to track the performance of companies that stand to benefit from interest in, and resources spent on, pet ownership. Food, toys and treats may be among the first items that come to mind when we think about pets and pet care, but in fact, companies that focus on pet health account for more than half of the FactSet Pet Care Index. And, as many pet owners are too well aware, trips to the veterinarian often come with hefty price tags.
- IDEXX Laboratories’ stated purpose is to create exceptional long-term value for its shareholders, customers, and employees by enhancing the health and well-being of pets, people, and livestock.
- Provides pet wellness diagnostics, including tests for parasites, pancreatic and cardiac health.
- One of the world’s leading animal health companies, driven by a singular purpose: to nurture the world and humankind by advancing care for animals.
- The company’s portfolio and pipeline of medicines, vaccines, diagnostics and technologies make a difference in over 100 countries.
- Founded in 2006, a leader in the pet food industry using farm-fresh ingredients to manufacture preservative- and additive-free refrigerated food and treats for cats and dogs.
- Products distributed in over 20,000 stores in North America, including natural food retailers, pet specialty stores and major retailers.
- A leading online retailer that sells more than 70,000 items, including food, toys, medication and other pet-related products.
- Provides cost-effective overnight delivery of pet supplies to approximately 80% of the United States (~100% in two days) through 13 fulfillment centers.
- Founded in 1997, a European company focusing on licensed pharmaceuticals and specialist pet foods.
- Manufactures in seven countries and sells products across 72 countries.
Population growth is a key driver for the U.S. economy. The pandemic brought population growth in the United States to a near halt, with reports indicating growth of just 0.35% for the year ending July 1, 2021.4 However, pet ownership growth followed the opposite trend during this time, reportedly tripling amid the pandemic following years of steady increases,5 indicating that when compared to the broader economy, pet care businesses may be better positioned for growth, driven by an increase in demand. Some investors may question if this trend will revert, but it is unlikely that all these new pets are going anywhere anytime soon. Additionally, unlike the overall economy, growth in pet care spending has proven resilient during prior economic downturns, including the Great Recession.
The uptick in pet ownership coupled with restrictions during the pandemic resulted in a backlog of veterinary appointments. Speaking from personal experience, back in April, I tried to make an appointment to get my dog’s teeth cleaned, and appointments for non-emergency procedures weren’t available until four months out. Recent data from veterinary industry tracker VetSuccess indicates that year-over-year trailing 12-month revenue for veterinary practices in the U.S. was up 13.1% as of July 25, 2021.6 While many businesses have struggled over the past eighteen months, landlords have reportedly been more amenable to leasing to veterinary clinics, since many vets were better able to pay their rent on time during the pandemic while other businesses fell behind.7
The pet care industry provides investors with a way to access a segment of the equity market poised for continued growth. Not only has pet ownership grown, but over the years, pet owners have dramatically changed the way they think about and care for their pets—our four-legged friends have become part of the family. Capitalizing on the changing trends in both demographics and consumer behavior may prove a prudent investment.
1APPA, 2021-2022 National Pet Owners Survey
2Source: Bloomberg, 12/31/2019 -6/30/2021
3Global Market Insights, Feb 2021
4The Wall Street Journal, “U.S. Population Growth, an Economic Driver, Grinds to a Halt,” July 2021
5Morgan Stanley, “Welcome to the Petriarchy,” March, 2021
6VetSuccess, July 2021
7The New York Times, “Vets Go Upscale to Care for Pets (and Their Owners),” July 2021
PAWZ is the first ETF that allows investors to capitalize on people’s passions for their pets. PAWZ gives investors the opportunity to gain broad exposure to public companies in the global pet care industry—companies that stand to potentially benefit from the proliferation of pet ownership and the emerging trends affecting how we care for our pets. PAWZ tracks the FactSet Pet Care Index.
As of 6/30/2021 PAWZ included allocations of 10.55% to IDEXX Laboratories, Inc.; 9.98% to Zoetis, Inc.; 8.37% to Dechra Pharmaceuticals plc.; 8.87% to Chewy, Inc.; 8.95% to Freshpet. Holdings are subject to change.
Sources for company information: IDEXX Laboratories, 2021; Dechra Pharmaceuticals Annual Report 2020; Zoetis 2021; Freshpet 2021; Chewy 2020 Annual Report.
This is not intended to be investment advice. There is no guarantee forecasts will be met. Indexes are unmanaged and one cannot invest in an index.
Any forward-looking statements herein are based on expectations of ProShare Advisors LLC at this time. ProShare Advisors LLC undertakes no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Investing is currently subject to additional risks and uncertainties related to COVID-19, including general economic, market and business conditions; changes in laws or regulations or other actions made by governmental authorities or regulatory bodies; and world economic and political developments.
Investing involves risk, including the possible loss of principal. This ProShares ETF is non-diversified and entails certain risks, including imperfect benchmark correlation and market price variance, that may decrease performance. Please see their summary and full prospectuses for a more complete description of risks. There is no guarantee any ProShares ETF will achieve its investment objective.
The fund is subject to the risks faced by companies in the pet care industry. Although the pet care industry has historically seen steady growth and has been resilient to economic downturns, these trends may not continue or may reverse. Consumer tastes and preferences are difficult to forecast. Changing consumer preferences could have a negative impact on the revenue streams of companies in the pet care industry. Many companies in the pet care industry are small, independent producers and retailers. Investments in smaller companies typically exhibit higher volatility. Smaller company stocks also may trade at greater spreads or lower trading volumes, and may be less liquid than stocks of larger companies. The fund concentrates its investments in certain sectors. Narrowly focused investments typically exhibit higher volatility.
The "FactSet Pet Care Index" and "FactSet" are trademarks of FactSet Research Systems Inc. and have been licensed for use by ProShares. ProShares have not been passed on by these entities or their affiliates as to their legality or suitability. ProShares based on the FactSet Pet Care Index are not sponsored, endorsed, sold, or promoted by FactSet Research Systems Inc., and it makes no representation regarding the advisability of investing in ProShares. THIS ENTITY AND ITS AFFILIATES MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO PROSHARES. FactSet Research Systems Inc. does not guarantee the accuracy and/or the completeness of the FactSet Pet Care Index or any data included therein, and FactSet Research Systems Inc. shall have no liability for any errors, omissions, or interruptions therein.
Carefully consider the investment objectives, risks, charges and expenses of ProShares before investing. This and other information can be found in their summary and full prospectuses. Read them carefully before investing.
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