The ETF industry has finally got a product on pets from ProShares. The issuer indicated that the global pet care market is worth about $132 billion, with strong expectations for growth from both millennials and boomers (read: 4 ETF Ideas to Follow Millennials' Lifestyle).
With about 80 mergers and acquisitions taking place in this field over the past year, increasing corporate activity is noticeable. For example, General Mills, renowned for ready-made foods has forayed into the pet food industry recently with the acquisition of Blue Buffalo.
ProShares went on to highlight that the sector is non-cyclical in nature. “It has grown steadily every year since 1994, including through the Great Recession.” according to the issuer. The name of the newly launched fund is ProShares Pet Care ETF PAWZ.
Inside the Newly-Launched Fund
The fund looks to track the pet industry. The fund follows the FactSet Pet Care Index, which uses a modified market cap methodology.
The underlying index of the product will include domestic and foreign companies that make at least half of their revenues from businesses related to pet-care-related or veterinary-related products and services. The index has at least 21 constituents.
How Big is the Pet Care Industry?
The pet industry has been growing by leaps and bounds lately. Americans shelled out about $70 billion on their pets in 2017, including health foods and luxury items. And Euromonitor noted that the industry expanded three times more than 1.2% growth noted in the packaged food industry last year.
Back in 2013, Americans had spent about $55.7 billion on pet products, per the American Pet Products Association, as quoted on CNBC. The number spiked to $66 billion in 2016 and hit $69.51 billion in 2017. Of this, about $29 billion to $30 billion was shelled out on pet food alone. Now, the market expects the pet industry to see about $72.1 billion in spending this year.
Actually, along with themselves, people are applying health consciousness on their pets too. Demand for packaged and processed human foods is on the decline, and food companies are now aiming the bourgeoning pet industry to compensate for the decline in the human category. With millennials considering pets as family members and seven out of 10 U.S. households having pets, this market is sure to grow in the coming days.
The space is not crowded. An exchange-traded managed fund (ETMF) from Gabelli NextShares, namely Gabelli Pet Parent Fund (PETZC - Free Report) is available. ETMFs behave like ETFs but these are actively managed in a nontransparent manner (read: ETMF: A Mutual Fund in an ETF Wrapper?).
However, with General Mills planning to foray into this division, the proposed funds may face some threats from General Mills-heavy funds like Invesco Dynamic Food and Beverage (PBJ - Free Report) .
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