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The pet economy is among the megatrends, the first thematic ETF on pet care arrives

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The pet economy is among the megatrends, the first thematic ETF on pet care arrives
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Spending on pets is steadily on the rise and the outlook is for a consolidation of this trend. According to research published by Morgan Stanley the trajectory of household pet spending is expected to grow from $ 980 in 2020 to $ 1,292 by 2025, and then expand by another $ 600 to $ 1,909 by 2030. This makes of the pet economythat is the economy linked to pets, a sector to be monitored also from an investment perspective.

Pet care is proselytizing in the new generations

Fido & co are considered to all intents and purposes as members of the family and often no expense is spared as if they were real children. A trend that has strengthened during the blocks linked to Covid-19 and with the increasingly widespread use of smart working. According to a survey conducted by AlphaWise (Morgan Stanley) in the middle of last year, 65% of young people between 18 and 34 were planning to buy (or adopt) a pet in the next 5 years. In addition, it turned out that pet owners – especially younger ones – consistently spend more on their pets than previous generations.

“There are several themes that shape the future of pet care – explains Rahul Bhushan, co-founder and director of Rize ETF – The first is the trend towards greater humanization. Over the past 20 years, pets have gone from sleeping in our backyards to sleeping in our beds. We now treat our pets like our children. Anthrozoologists like John Bradshaw have argued that pet care is an intrinsic part of human nature and what we are seeing today with Millennial and Gen Z families is a new type of pet ownership, more attentive and dedicated. Second, and related, is the decline of the traditional nuclear family. Many single-person, unmarried and childless families are adopting more and more pets, and the growth of our aging population has also led to more furry companions. Third, it’s our digital – and post-Covid – flexible lifestyle. With the rise of smart working, pet adoption has suddenly become a lot easier, and people are making a long-term commitment to their pets. For pet care businesses, this meant big business. Today the pet industry stands on a solid footing and offers products with irresistible purchasing power and constant demand. We are thrilled that our investors can now access this long-term megatrend through our Rize Pet Care UCITS ETF. ”

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It was Rize ETF that today listed the first European ETF on pet care on the Italian Stock Exchange, the Rize Pet Care UCITS ETF, which invests in companies that are benefiting from the increase in the number of pet owners. The Rize Emerging Market Internet and Ecommerce UCITS ETF, a new thematic ETF focused on emerging markets that provides exposure to the EM digital consumer market while limiting individual country exposure. To do this, the Emerging Market ETF ensures that exposure to a single emerging market never exceeds 25% in index rebalances. Both ETFs are also listed on the London Stock Exchange (LSE), the Frankfurt Stock Exchange (Xetra) and SIX Swiss Exchange.

Digital revolution also in EM

Emerging markets today have their online economies in full swing. Rising disposable income, urbanization, positive reform momentum, strong demographics and widespread adoption of digital devices form the basis of this new megatrend. Most of us already know the digital giants of the emerging world, from Baidu (China’s answer to Google) to MercadoLibre (Argentina’s answer to Amazon) and MakeMyTrip (India’s answer to TripAdvisor). Yet these companies are only scratching the surface of the huge opportunity facing this industry. Today, emerging markets comprise more than half of the world‘s population, many of whom are of working age. And these people are driving increasing digital consumption and demanding better services as a result of increased awareness, social connectivity, mobility and concerns about sustainability. The outlook for digital demand, therefore, has never been better in emerging markets.

Emanuela Salvadè, Head of Italian Speaking Regions at Rize ETF, comments: “We are thrilled to launch our first regional thematic ETF, specifically targeting the rise of the emerging market digital consumer. The emerging world contains 22 of the world‘s 37 megacities. More than half of the world‘s population lives in emerging markets, including 86% of the world‘s Millennials and 89% of Gen Z. In the coming years, we are looking at two converging but mutually reinforcing megatrends: the internet as an incubote of technological innovation and e-commerce as a catalyst for behavioral change. We believe our new ETF is well positioned to capture the opportunity given by these elements. At the same time, we recognize that investing in emerging markets is not without risk. Therefore, our ETF does two things: First, it complements our standard ESG screening to avoid exposure to unethical companies. Second, it limits exposure to a single country to 25%, ensuring that the strategy never morphs into a Chinese proxy fund, which plagues many emerging market funds. “

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