As time goes on, the axiom that there is an exchange-traded fund (ETF) for everything has become more and more true. ETFs have been the trendiest mainstream investment sphere for many years, and the field has grown crowded with thousands of funds. Each fund aims to offer low-cost access to a wide portfolio of stocks, most often linked together by a theme, trend or other identifiable commonality.
In an effort to distinguish new funds, ETF providers have explored increasingly esoteric and specific fund themes. A recent Bloomberg report profiles what may be the most specific ETF yet: the U.S. Vegan Climate ETF (NASDAQ: VEGN), provided by Beyond Advisors IC of Jersey, off the coast of France.
- Socially responsible investing has increased in popularity, with several ETF providers now specializing in SRI/ESG offerings.
- The U.S. Vegan Climate ETF (NASDAQ: VEGN), provided by European-based Beyond Advisors IC is the first SRI ETF to specialize in vegan investments.
- The fund seeks environmentall-friendly companies that share values with the vegan community while avoiding companies that transgress veganism in their business.
About the Fund
According to the fund's prospectus, it aims 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." In this way, the U.S. Vegan Climate ETF is the latest and perhaps most stringent of the growing pool of socially responsible funds, ETFs and other vehicles that allow investors a means of investing while staying true to values and beliefs that they wish to maintain in the process.
Per Bloomberg, the U.S. Vegan Climate ETF has set up strict requirements for its underlying index. The index was generated by removing companies from the membership of the Solactive U.S. Large Cap Index. Companies engaging in any business activity that harms animals are excluded from the list. As a result, Beyond Advisors claims that "an investor in this new index will avoid funding the slaughter of 13 animals a year for every $1,000 invested." Companies that are left out of the index include those that participate in animal-derived agriculture or other similar products, those that engage in animal testing, and those that utilize animal-based research, among others.
Companies excluded from the underlying index also include those that engage in the production or refining of fossil fuels, those with a significant carbon footprint or history of environmental destruction, and so on. Furthermore, the fund excludes companies that are related to the tobacco industry, those with demonstrated ties to human rights abuses, and those in the defense and military industries. Finally, even companies that are not directly related to any of the above may be excluded if they do business with those other firms – certain financial companies are thus prohibited from being a part of the fund's underlying index.
All told, the U.S. Vegan Climate ETF currently has about 300 companies in its underlying index, weighted by market capitalization.
Cost to the Investor
As is often the case with vegan alternatives to traditional products and services, investors can expect to pay a premium for their investment in the U.S. Vegan Climate ETF, according to ETF.com. The three-person team at Beyond Advisors responsible for curating the fund itself identifies as vegan, helping to ensure that the fund continues to stay true to its aims as it progresses.
At the time of its launch, the U.S. Vegan Climate ETF was available for an expense ratio of 0.60%, meaning that it is higher than most other socially responsible funds. The average cost for a socially responsible ETF hovers closer to 0.44% as of this writing, which makes this pool of ETFs nonetheless more costly than many other options.
Still, the focus on social responsibility is enough to draw many eager investors, including a high proportion of millenial investors looking to reap the rewards of investing without compromising their values. All told, there are roughly 75 socially responsible ETFs available at this time, collectively holding assets of approximately $7.6 billion, showing that investors as a group take this approach quite seriously.