New ETF for pet lovers launches in Europe

Thematic ETFs continue to attract more flows

Thematic ETF investing continues to go strong this year with investors adding roughly $10 billion into Thematic ETFs in the first quarter of 2022. Almost $3.9 billion of these flows went into America-domiciled Thematic ETFs, $3.41 billion into Europe-domiciled ESG ETFs, and $2.65 billion into APAC-domiciled Thematic ETFs.

There have been some exciting new launches, mainly in Europe – such as the first Metaverse ETFETC Group Global Metaverse Equity UCITS ETF (METR), over dozen of Global X thematic ETFs launches such as Global X Solar UCITS ETF (RAYZ) and the Global X AgTech and Food Innovation UCITS ETF (KROP) – to mention a few.

Niche pet care theme ETF now available in Europe

Among the themes that have been available in Europe recently is the pet care theme with the launch of the Rize Pet Care UCITS ETF (PETZ). The niche theme was previously only accessible in America through ProShares Pet Care ETF (PAWZ) – a fund that has been around since November 2018.

This represents an exciting time for investors who are looking to gain exposure beyond traditional sectors and geographies. Thematic ETFs are a solution of choice for thematic investing. In a single transaction, investors can capture the investment opportunity of one or more themes emerging from trends and megatrends.

Pet care theme overview

Pet care is a booming industry as pet ownership has surged over the past few decades and was accelerated during the pandemic. Over the last 30 years, pet ownership has gone from 56% to 68% of all US households. Some of this change is due to technology and the advent of online purchasing. The main catalyst that spurred growth is the shift in culture. As younger generations have entered adulthood, they have embraced the pet-owning and pet-loving lifestyles much more than previous generations. Today, households headed by younger cohorts account for 62% of all pet ownership (American Pet Products Association (APPA), 2020).

The outlook for the industry looks bright as APPA estimates that the $103.6 billion US pet care industry is expected to grow at an annual rate of 10.3% to reach a size of $USD 275 billion by 2030 due to favorable demographics, increased per-pet spending, and a surge in new pet owners.

Investing in Pet Care ETFs in America

PAWZ by ProShares seeks to track the FactSet Pet Care Index and invests in publicly-listed companies that are set to benefit from a booming Pet Care industry. As of April 4th, 2022, the fund's top country exposure is the United States (65%), followed mainly by the United Kingdom (17%), Switzerland (4.87%), Sweden (4.25%), and France (2.97%). In terms of pet care sub-industry exposure (of the index), Veterinary Pharmaceuticals has the highest share (23.15%), then Veterinary Diagnostics (13.43%), Pet and Pet Supply Stores (12.6%), Internet Pet and Pet Supply Retail (8.51%), and Pet Food Manufacturing (6.66%) – among other.

PAWZ top leading names include Indexx Laboratories (IDXX, 10.13%), Zoetis Inc. (9.38%), Dechra Pharmaceuticals PLC (9.31%), Freshpet Inc. (7.36%), and Chewy Inc. (6.57%) – to mention a few.

PAWZ has a total expense ratio of 0.50% and trades primarily on the Cboe BZX exchange. A $10,000 invested in PAWZ on the inception date (November 5th, 2018) would have turned into $17,225 by April 4th, 2022.

Investing in Pet Care ETFs in Europe

The newly launched PETZ aims to track the Foxberry Pet Care index of 29 companies involved pet food and consumables, pet retail goods and services, pet health, pet insurance and veterinary services and equipment. Companies included in the index must derive at least 20% of their revenues from the target theme, have market cap of at least $750 million and a daily trading volume exceeding $2 million. The United States has the highest country allocation (75%), followed by Brazil (7%), the United Kingdom (6.5%), and Japan (5.6%). 48% of the portfolio net assets are exposed to companies in the Pet healthcare sector, 29% in Pet Retail, 18% in Pet Food and Manufacturing, and 5% in Pet insurance.

The fund's top leading names include Pet Center Comercio E Participacoes (7.37%), Patterson COS (6.69%), Petco Health and Wellness (6.6%), Freshpet (6.32%), and Idexx Labs. (5.57%) – to list a few.

PETZ has a total expense ratio of 0.45% and trades on multiple European exchanges, including the London Stock Exchange (PETZ, USD or PAWZ, GBP), Deutsche Boerse (KATZ, EUR), and will list on SIX Swiss Exchange and the Borsa Italiana in the near future.

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