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Pet Industry Is Getting All Love From ETF Issuers


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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 industry to see about $72.1 billion in spending this year.

What Is Driving This Industry?

Actually, health consciousness is broad-based among Americans and people are applying this on their pets too. Demand for packaged and processed human foods is falling, and food companies are now targeting the budding pet industry to make up for the decline in the human category.With millennials considering pets as family members, this market is sure to grow in the coming days (read:  Inside the Rise of Thematic ETFs ).

ETF Issuers Are Increasingly Betting Big on Pet Industry

Most recently, ProShares has planned an ETF that will give investors access to products and services that are part of the pet industry. The planned fund, ProShares Pet Care ETF, will track the performance of the FactSet Pet Care Index, which is equal-weighted and rebalanced on a monthly basis . The expense ratio of the fund is not disclosed.

As of Apr 30, 2018, there were 22 companies on the index. The underlying benchmark will comprise domestic and foreign companies that derive at least half of their revenues from businesses related to pet-care-related or veterinary-related products and services, per etf.com.

A few days back, Gabelli Nextshares filed for a pet-oriented ETF called Gabelli Pet Parent Fund. The fund looks to track companies that offer services and products for pets and pet owners. The underlying industry encompasses  food, healthcare, veterinary  services, pharmaceuticals, wellness, nutrition, equipment, medical and dental supplies and services related to the well-being of pets. The product charges 90 bps in fees (read: Is Gabelli Nextshares Introducing a Pet-Friendly ETF? ).

And why won't ETF issuers target this fast-moving industry? Global sales of all pet care products and services, including pet food, jumped 14% from 2012 to 2017 with the U.S. market leading pet care and pet food sales. General Mills, renowned for ready-made foods, has announced this year that it would buy the Wilton, Connecticut-based company Blue Buffalo Pet Products for  about $8 billion  in cash.

Will the Duo Be Successful?

Presently, the pet care industry is devoid of such pure-play products. So, from that point of the view, the duo will see easy success, if it gets approval and even enjoy first-mover advantage over the long run. However, with General Mills planning to foray into this division, the proposed funds may face some threats from General Mills-heavy funds like  PowerShares Dynamic Food and Beverage PBJ and  Ivy Focused Value NextShares IVFVC .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , ETFs
Referenced Symbols: PBJ , IVFVC



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