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Should You Buy This Vegan ETF?

By MyWallSt Staff - Updated Oct 7, 2019 at 1:52PM

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The first-ever vegan-friendly ETF has come to Wall Street.

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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 alternative meat and vegan products.

A whole industry has arisen to cater to this shift in consumer taste, 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.

Fresh vegetables with dressing on plate

Image source: Unsplash.

At least, that's what many analysts expected. 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 companies, leather-and-fur manufacturers, or any other organization that does business by way of killing or exploitation -- what Beyond Investing CEO Claire Smith has 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, Facebook, and Apple. 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. However, the roaring success of Beyond Meat 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. 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.

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Image source: MyWallSt.

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

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool owns shares of and recommends Apple and Facebook. The Motley Fool has the following options: short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
META
$168.53 (-1.01%) $-1.72
Apple Inc. Stock Quote
Apple Inc.
AAPL
$164.92 (0.03%) $0.05
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$115.38 (0.90%) $1.03
Beyond Meat Stock Quote
Beyond Meat
BYND
$37.05 (-5.75%) $-2.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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