Goldfish Tracker

Speedread:

  • ProShares lists pet care ETF, in a sign that a new theme is emerging
  • WisdomTree lists active fixed income ETF in Canada
  • HANetf adds two new tech ETFs

USA

ProShares lists pet care ETF

Leveraged and inverse ETF specialist ProShares is listing a new ETF targetting your cat, dog and goldfish. The ProShares Pet Care ETF (PAWZ) will track a FactSet index of the pet care industry which “has historically seen steady growth and has been resilient to economic downturns,” the prospectus says.

 

The index tracks companies whose primary business is pet care-related. In order for a company to be considered pet care-related, its main revenue source must be from one of eight FactSet Revere sub-industries or generate $1 billion in annual revenue from one of those eight sub-industries. The eight sub-industries are: Pet Food Manufacturing; Pet Supplies Manufacturing; Pet and Pet Supply Stores; Veterinary Pharmaceuticals; Veterinary Diagnostics; Veterinary Product Distributors; Veterinary Services; and Internet Pet and Supply Retail.

 

Additionally, the company’s regulatory filings must satisfy FactSet that it focuses on pet products and services.

 

Companies can be tapped for the index even if they aren’t from those sub-industries. So long as FactSet is satisfied they have a major revenue channel that is pet industry related enough. The example the prospectus gives is insurance companies that provide pet coverage. This is pet care related, but pet insurance is not an RBIC sub-industry.

 

Analysis – who let the dogs out?

Dog ownership among the global middle classes is skyrocketing. From Brazil, to the US to Norway, middle class professionals are working more, earning more and putting off responsibilities like marriage and parenthood. But to fill their lives and provide substitute children in the meantime, they’re all turning to dogs.

 

The result is a booming global pet care industry – from dog food, to veterinary clinics, to dog shows and dog hotels. Some of the winners of these macroeconomic trends aren’t who you’d always suspect either. As an anecdote: a fencing company I spoke to recently said they make 70% of their revenue building new fences to stop dogs from escaping.

 

While pet ownership is clearly a cultural and economic theme, we’re unclear how well this can be translated into an index composed of publicly traded companies. A lot of the businesses making profits from dog products, like Nestle for dog food and Merck for drugs, are diversified and make a low single digit percent of their total revenue from pet care. This means buying these companies gives weak exposure to the pet care theme. There’s also a sense in which the pet care industry is intrinsically local, as Bruce Greenwald would have things. Your local fencer, your local dog breeder, your local vet – these are the real winners in this global trend. But these businesses are all usually unlisted and thus escape indexing.

 

I own pet ducks though the only one who profits from them is the local foxes. We like this theme and because it’s intuitive and self-marketing, we suspect it will attract assets. We’re just a bit less convinced on performance.

 

Canada

WisdomTree lists actively managed North American bond ETF

Under its “ONE” sub-brand, WisdomTree is listing a new actively managed fixed income ETF in Canada. ONE North American Core Plus Bond ETF (ONEB) will pick bonds from the universe of investment grade North American fixed-income securities issued by corporations, governments and government-related entities and agencies.

 

In order to select securities for ONEB, WisdomTree will do a lot of research. This research includes: looking at issuers’ fundamentals and credit scores; viewing issuers’ industry and growth prospects; analyzing issuer’s competitive position; and reviewing their return relative to the issuer’s risk and general market conditions, the prospectus says. ONEB will also currency hedge where necessary.

 

UK

HANetf lists two more ETFs

HANetf, the European white labeller, and Solactive, the German indexing house, are teaming up to list two new thematic ETFs targeting new tech.

  • HAN-GINS Innovative Technologies ETF (ITEK)
  • HAN-GINS Cloud Technology ETF (SKYY)

ITEK tracks an index of companies deemed by Solactive as hailing from the following industries: Robotics and Automation, Future Cars, Cyber Security, Cloud Computing, Genomics and Social Media. While SKYY picks 50 stocks that are “most closely related” to cloud computing, Solactive said. In order to determine if companies for with the theme, Solactive will use its proprietary “Algorithmic Theme Identification System”, a software that uses natural language processing to identify thematic exposures in companies using unconventional data sources.

 

Cross-listings

Germany

VanEck is cross-listing its global REIT ETF from the Netherlands to Germany. Think Global Real Estate UCITS ETF (TRET) will now be listed in Berlin.