Returns with Bello, Rocky, and Kitty – an Animal-Inspired Investment Opportunity

Although pets have been part of millions of households for a long time, their numbers have surged significantly in recent years. One contributing factor was the Covid-19 pandemic, which temporarily brought social life to a standstill and increased demand for animal companionship. Interesting data comes from the United States, the country with the world’s largest pet population. According to the American Veterinary Medical Association (AVMA), the number of pet dogs in the U.S. has steadily risen over the past 30 years, from an estimated 52.9 million in 1996 to 89.7 million in 2024. Including house cats, the total population of these two favorite pets now stands at 163.5 million, a 45 percent increase since 1996 (Avma.org, “Long-term Trends in Pet Populations,” December 2024). A study by the European Pet Food Industry Federation (FEDIAF) confirms this trend. Between 2016 and 2022, the number of household dogs in Europe rose by 22 percent, from 87 to 106 million. House cats also gained in popularity, increasing by a quarter from 103 to 129 million across the continent (FEDIAF, The European Pet Food Industry, Facts & Figures, 2016/2022).

Given these figures, it’s no surprise that a billion-dollar industry has developed around pets. Our companions with fur, feathers, scales, or fins not only require affection but also need to be fed, groomed, entertained, and receive veterinary care – all of which costs money. According to a study by Morgan Stanley, annual spending per pet in the U.S. averaged 1,155 US-Dollars in 2024. The total volume of the U.S. pet industry is estimated at 164 billion US-Dollars. Europeans are similarly generous when it comes to their animal companions. According to FEDIAF, spending on pet food alone amounts to around 30 billion Euros annually.

From an investment perspective, the market for pet products and services could offer highly attractive prospects. There are several reasons for this: First, research indicates that the global number of pets will continue to grow, along with related spending. Second, pets are living longer, increasing the costs associated with elderly care. Pets’ increased life expectancy is due to ongoing improvements in veterinary healthcare. Morgan Stanley’s study projects that U.S. pet industry spending will grow by an average of seven percent per year until 2030. According to Morgan Stanley, this would outpace the growth of almost all other retail sectors. The study also highlights the younger generation’s growing affection for pets: more than a third of 18- to 34-year-old Americans intend to acquire a pet. This generation, according to Morgan Stanley, is particularly generous and spends more on pets than other age groups (morganstanley.com; Research, July 2024).

Another growth driver is the increasing popularity of pets in Asia’s emerging markets. A Goldman Sachs report made global headlines by calculating that in 2024, China’s urban pet population (dogs and cats) reached about 58 million, surpassing the number of Chinese children under the age of four for the first time. And that's not all: By 2030, Goldman Sachs projects that China’s pet population will exceed 70 million, more than double the number of young children under four years old (cnbc.com, report from August 7, 2024). Pets could increasingly be seen as substitutes for having children. According to the Global Times, with the steady growth of pet ownership, China’s pet economy has become an important driver of overall consumption growth (Global Times, report from February 21, 2025).

There are compelling arguments for investing in the pet industry, though it must always be considered that forecasts and estimates are not reliable indicators of future results. A market analysis by Bloomberg Intelligence (BI) forecasts that the global pet industry volume will grow from 320 billion US-Dollars in 2022 to nearly 500 billion US-Dollars by 2030—a 56 percent increase (Bloomberg, Global Pet Care Industry Market, Update July 22, 2024).

One way to invest in the pet economy in a diversified manner is through newly issued Open-End Tracker Certificates from Vontobel on the Solactive Pet Industry Index. The Solactive Pet Industry Index is managed and calculated by Solactive AG. The index focuses on publicly traded companies operating in various segments of the pet market. This includes businesses specializing in the development, manufacturing, and distribution of pet food and supplements. Providers of pet grooming and hygiene products, pet toys, and other pet accessories are also eligible. Companies involved in veterinary medicine (e.g., animal hospitals), pharmaceuticals, and diagnostic solutions for pets can also be included, as well as pet insurance providers and other service companies (e.g., boarding, training, wellness).

Potential index constituents are identified through a screening process that uses company profiles and publications analyzed by a language algorithm. Using keywords that describe the index’s theme, the algorithm searches for suitable companies, from which 20 are selected based on a ranking system that also determines their weighting within the index. To keep the strategy as closely aligned with the market as possible, the index undergoes a review and rebalancing twice a year, in March and September. The Open-End Tracker Certificates track the performance of the Solactive Pet Industry Index one-to-one—accounting for applicable fees—with no time or amount restrictions. One important point: the underlying index is calculated as a Net Return Index in US-Dollars, meaning that net dividends from the index constituents are factored in.

Solactive AG ("Solactive") is the licensor of the Solactive Pet Industry Index (the "Index"). The financial instruments based on the Index are in no way sponsored, endorsed, promoted, or sold by Solactive, and Solactive makes no express or implied representations, warranties, or guarantees regarding: (a) the advisability of investing in the financial instruments; (b) the quality, accuracy, and/or completeness of the Index; and/or (c) the results that any natural or legal person may obtain or will obtain by using the Index. Solactive does not guarantee the accuracy and/or completeness of the Index and shall not be liable for any errors or omissions relating to the Index. Without prejudice to Solactive’s obligations towards its licensees, Solactive reserves the right to amend the calculation or publication methods in relation to the Index and shall not be liable for any incorrect calculations or any incorrect, delayed, or interrupted publication of the Index. Solactive shall not be liable for any losses or damages of any kind, including but not limited to lost profits, business interruption, or any special, incidental, indirect, or consequential damages arising from or related to the use of (or inability to use) the Index.