ProShares launches first pet care ETF

Nov 6th, 2018 | By | Category: Equities

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ProShares has launched the first ETF focused on the pet care industry – the ProShares Pet Care ETF (PAWZ US).

ProShares Pet Care ETF

ProShares forecasts annual pet care spending to reach $203 billion by 2025.

Listed on Cboe BZX, PAWZ provides investors with a means to benefit from the theme of pet ownership and the emerging trends in how owners care for their pets.

ProShares notes that seven out of ten US households today have pets, up from five out of ten 30 years ago, and that the proportion of households with pets now outnumbers those with children.

The issuer argues that pet owners typically consider their pets to be part of the family with 79% of owners believing the quality of their pets’ food should match their own.

Pets are also increasingly insured, a sizeable business its own right.

Similar to healthcare expenditure, the pet care industry has also proven resistant to economic downturns.

According to ProShares research, the industry has seen twice the percentage growth of GDP since 2007, and increased even during the Great Recession. Corporate investment interest in the pet care industry has intensified, too. More than 80 mergers and acquisitions over the past 12 months indicate that a wide range of companies is attracted to and investing in this industry.

Michael L. Sapir, co-founder and CEO of ProShare Advisors, commented, “Pet owners are spending billions on premium-quality foods, state-of-the-art health care, insurance policies, luxury services and more. It’s causing a new pet care economy to emerge that could reach $203 billion by 2025. With PAWZ, we’re giving investors broad exposure to this emerging industry in a single ETF.”

The ETF tracks the FactSet Pet Care Index which includes firms from both US and international developed markets.

To be eligible for inclusion, a company’s principal revenue source must be come from one of thee following eight sub-industries, as defined by FactSet: pet food manufacturing, pet supplies manufacturing, pet and pet supply stores, veterinary pharmaceuticals, veterinary diagnostics, veterinary product distributors, veterinary services, and internet pet and supply retail.

The index also includes firms whose principal business is identified by FactSet as being pet care related, but for which an appropriate subindustry has not yet been created (e.g., pet insurance).

Collectively, these companies will make up 82.5% of the total index weight at each rebalance.

The remaining 17.5% of the index exposure will be allocated to firms that are not directly assigned to the above subindustries but generate at least $1 billion in annual revenue from one of these categories.

Components are weighted by market capitalization within, subject to caps of 10% for companies whose principle business is in pet care and 4.5% for companies indirectly related.

The index is rebalanced on a monthly basis and reconstituted annually.

The fund comes with an expense ratio of 0.50%.

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