Tracker Certificate on the Pet Indutry Basket
Betty, the maltese poodle, sleeps in a four-poster bed in her own bedroom, complete with a wardrobe of pearl and diamond necklaces. She is not the only one.
The indulgent lifestyles of and increased expenditure on, our furry friends did not go unnoticed by Chewy Inc. and its investors. The online pet supplies retailer made a strong debut on the NYSE in June, with shares soaring as much as 88% in the first hour of trading as investors bet that pet owners will do more of their shopping online.
Overall, the pet industry has seen major growth in recent years with a particular spotlight on China, which estimates over 91m dogs and cats being raised as pets in urban areas. The Chinese are forecast to spend about US$2.7 billion on their pets by 2020 with an average annual growth rate of 31% from 2010 to 2020, far exceeding consumption growth.
This, however, pales in comparison with what Americans spend on their pets annually. This year alone, pet spending in the U.S. is estimated to exceed $75 billion. In 2018, pet care spending reached a record-breaking high of $72 billion, which is more than the combined GDP of the 39 poorest countries in the world. With millennials, and their willingness to pay more for quality, continuing to be the largest pet-owning demographic, this growth is expected to continue.
While spending on pet food continues to make up the majority of dollars spent in the industry, we can also expect growth on in other areas such as accessories, OTC medicine and veterinary Care. Therefore, to provide adequate exposure to this theme, we have set up a diversified basket across various segments in the industry. The Julius Baer Tracker Certificate on the Pet Industry Basket comprises of thirteen stocks, which are expected to benefit from this growing trend.
- This strategy provides access to companies that are set to benefit from the long-term trend of a booming pet industry
- Tracker certificates allow investors to fully participate in the performance of the underlying
- The underlying is a basket of 13 stocks, which are equally weighted on the initial fixing date and geographically diversified, including European, US and Asian companies