Should You Buy This Vegan ETF?

The first-ever vegan-friendly ETF has come to Wall Street, but should investors put their money where their mouths are?

Oct. 10, 2019

Data has shown that both investors and consumers are becoming more socially conscious, especially when it comes to the tricky world of food production. With roughly 9 billion animals slaughtered every year in the U.S. in order to stock our fridges — not to mention the many billions more across the globe — it’s no wonder that people are responding by embracing the likes of alternative meat and vegan products.

A whole industry has arisen to cater to this growing demographic, and it comprises everything from organic supermarkets to meatless burgers. The times indeed are changing, and many investors don’t know where to begin. But don’t worry: for the uninitiated, or the plain confused, there’s a new fund in town called the U.S. Vegan Climate ETF, issued by Beyond Investing, that has picked out the vegan gems so you don’t have to.

At least, that’s what many analysts expected. On closer examination, the fund’s prospectus tells us that it intends to “address the concerns of vegans, animal lovers and environmentalists by avoiding investments in companies whose activities directly contribute to animal suffering, destruction of the natural environment and climate change.”

Put simply, the Vegan Climate ETF is little more than a bowdlerized S&P 500 fund, an opportunity to invest in the big Wall Street players without having to stake a claim in factory farmers, oil firms, leather-and-fur manufacturers, or any other organization that does business by way of killing or exploitation — what Beyond Investing CEO Claire Smith has collectively dubbed the “nasties.” Still, it comes as a surprise that a fund whose image appears to be quirky and millennial-friendly should include such behemoths as JPMorgan Chase (NYSE: JPM), Facebook (NASDAQ: FB) and Apple (NASDAQ: AAPL). Indeed, its four biggest holdings are exactly the same as those of the S&P 500.

As it stands, the Vegan Climate fund is a little too arbitrary and ill-defined to inspire confidence at the moment. However, the roaring success of Beyond Meat (NASDAQ: BYND) this year and the general excitement that alternative meat brands are generating among buyers suggests that the investing landscape could look very different a decade down the line. So much so we’ve made a list of 3 stocks for a meat-free future. A central aim of the fund will be, in Smith’s words, “to add [socially conscious] stocks into the ETF just as soon as we possibly can, and so address the underweights that we have to the consumer sector, which is frankly riddled with animal exploitation.” It’s more than possible that a whole host of such stocks will soon be available, and that Smith will be discerning enough to separate the exciting ones from the duds, but until then it’s a serious risk indeed.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Apple, Beyond Meat and Facebook. Read our full disclosure policy here.