Market Overview

A Vegan ETF Is Happening, But It May Not Look The Way You Expect

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A Vegan ETF Is Happening, But It May Not Look The Way You Expect

Some socially responsible exchange traded funds appear bland, but as the group grows, so are the number of unique offerings.

What Happened

One of those unique funds is the U.S. Vegan Climate ETF, which will traded under the ticker “VEGAN” and is slated to debut next month. It has been a long wait for VEGAN. Beyond investing, the fund's issuer, filed plans for the ETF almost a year ago and it was expected to debut in January.

“Beyond Investing is a vegan and cruelty-free investment platform providing access to investment products which adhere to vegan principles and accelerate our transition to a kinder, cleaner and healthier world,” according to the firm's website.

Why It's Important

While it may be reasonable to expect an ETF like VEGAN to be heavy on stocks such as Beyond Meat (NYSE: BYND), that's not necessarily the case.

“Rather, the ETF will screen out companies that engage in animal exploitation or whose activities harm animals,” reports The Wall Street Journal. It also will avoid companies engaged in environmentally damaging activities, as well as those in the defense and military industries or whose activities contribute to human-rights abuses.”

As is the case with many environmental, social and governance (ESG) funds, VEGAN is home to many familiar names from the S&P 500 such as Apple Inc. (NASDAQ: AAPL) and Microsoft Corporation (NASDAQ: MSFT).

The US Vegan Climate Index, VEGAN's underlying index, is home to 276 stocks with an average market value of $221 billion.

The index “excludes companies engaged in animal exploitation, defense, human rights abuses, fossil fuels extraction and energy production, and other environmentally damaging activities,” according to the issuer.

What's Next

VEGAN could establish a following among younger investors, a demographic that has warmed to ESG funds, and because the ESG is in need of fresher approaches.

“Appetite for socially responsible funds is increasing, as is the number of people turning away from meat, he says, pointing to a report from GlobalData showing a 600% increase in vegans in the U.S. over a recent three-year period,” according to WSJ.

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