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How the way we treat our pets can boost wealth

Updated: Jan 15

We are treating our pets more and more like humans, and it’s a global megatrend. Such megatrends have a lot to do with sustainable wealth creation, according to Insync Funds Management (Insync).

“Think of megatrends as enduring tailwinds that push some stock prices ahead of others, without cost,” says Insync CIO, Monik Kotecha. “The pet megatrend is one of 16 we have identified as ‘investment ready’.”

Mr Kotecha says our concern for the wellbeing of our pets now almost equals our concern for human family members. “We call it ‘pet humanisation’. Of course, this means certain services to vets are very big winners.

The rising middle class, coupled with explosive growth of single households is fuelling this megatrend, driving up pet ownership around the globe.

In the US alone, 70% of households own a pet, a third of which are millennial households. US citizens are spending around $1,100 on dog care and around $580 on cats a year. UK, Australia and the like are posting similar numbers

“In recessions, caring for pets is one of the very last things households cut back on too,” Mr Kotecha says

Insync has identified IDEXX Laboratories (IDEXX) as the trusted source of biological analysis for vets globally, manufacturing equipment and kits for diagnostic tests as well as the instruments and software used for testing.

“IDEXX has a huge growth runway for many years to come, as it's not only run really well, but it also benefits from the pet humanisation megatrend,” says Mr Kotecha. “A high return on invested capital, posting a profit of 20% per annum and it continues to grow strongly.”

Importantly, Mr Kotecha says not all companies impacted by a megatrend are best equipped to profit from them.

Some companies may not even be aware that megatrends exist and therefore don’t utilise the impact they can create. Even the best run firms with long records of success, rarely thrive if they are running against or are operating in ignorance of megatrends.

Equity Trustees Limited (“EQT”) (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for the Insync Global Quality Fund and the Insync Global Capital Aware Fund. EQT is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT). This information has been prepared by Insync Funds Management Pty Ltd (ABN 29 125 092 677, AFSL 322891) (“Insync”), to provide you with general information only. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither Insync, EQT nor any of its related parties, their employees or directors, provide and warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product.
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