U.S.-based investment advisor, Beyond Investing is soon going to provide a brand-new investment option to activists protecting the planet, primarily animals, from being exploited for commercial gains. Set to hit the New York Stock Exchange on Sep 10, the US Vegan Climate ETF (VEGN) will be the first of its kind globally. The fund has been developed by Beyond Investing’s team of experienced vegan finance professionals in the United States, Switzerland and the U.K.
VEGN in a Nutshell
The fund will track the US Vegan Climate Index introduced by Beyond Investing last June. The fund charges a fee of 60 basis points, basically for the large amount of research that is needed to construct the index. The index considers the constituents of the Solactive US Large Cap Index that is made up of roughly 500 of the largest U.S.-listed companies.
Notably, the index screens and removes companies that derive more than 'a de minimis proportion' of their total revenue from activities that involve exploitation of animals or humans, largely the planet, for commercial gains. In fact, companies involved in animal testing, animal-derived products, animal farming, use of animals in sports, entertainment and R&D purposes can’t be part of the index.
Companies selling tobacco products, armaments and products specifically developed for military and defense usages along with companies involved in extracting or refining, or services majorly related to the extraction or refining, of fossil fuels, burning of fossil fuels for energy production are mostly subject to the above criterion to be part of the US Vegan Climate Index.
What Makes VEGN an Attractive Pick?
The trend of going vegan is on the rise in the United States. In fact, the American vegan population grew 600% from around 4 million in 2014 to 19.6 million in 2017. Studying the trend, the Economist has in fact declared 2019 as “the year veganism goes mainstream.” Moreover, the Economist states that about 25% of Americans aged 25-34 years identify as vegan or vegetarian.
The Kroger Co. (KR - Free Report) , United States’ most popular grocer, has forecasted plant-based items to be among the top five food trends in 2019. As a large number of Americans are looking for vegan or vegetarian diet options amid growing concerns about health risks and environmental hazards, plant-based meat substitutes are much in demand. In this regard, vegan burger maker Beyond Meat, Inc. (BYND - Free Report) made a sizzling debut on Nasdaq on Apr 2 as its shares skyrocketed more than 160% on the first day at the close (read: Blockbuster Beyond Meat IPO Puts These ETFs in Focus).
Investors are also becoming increasingly inclined toward environmental, social and governance (ESG) investing as they appear to be bothered about the future of the environment and the effect it might have on their investment portfolio. This is because lesser focus on environmental issues by companies may result in lawsuits, fines and damages, per the source.
The fund might face tough competition from other ESG funds holding U.S. companies with good ESG ratings. Below we discuss a few ETFs that seek to provide exposure to ESG investing:
Xtrackers MSCI USA ESG Leaders Equity ETF (USSG - Free Report)
The fund tracks the investment results that correspond generally to the performance of the MSCI USA ESG Leaders Index. Notably, the index is comprised of large and mid-cap companies in the U.S. market and provides exposure to companies with superior ESG performance in comparison to their sector peers. The fund has 323 holdings with an AUM of $1.18 billion. The fund charges 10 bps in fees (read: U.S. ETFs Hit $4 Trillion in AUM: 4 Reasons Behind the Boom).
Vanguard ESG U.S. Stock ETF (ESGV - Free Report)
The fund tracks the performance of the FTSE US All Cap Choice Index comprising of large, mid, and small-capitalization stocks. It does not include companies operating in adult entertainment, alcohol and tobacco, weapons, fossil fuels, gambling, and nuclear power industries. It also doesn’t consider companies not meeting U.N. global compact principles and diversity criteria. The fund has 1594 holdings with an AUM of $551.3 million. It charges 12 bps in fees (read: 6 ESG ETFs Beating SPY This Year: Is There More Room to Run?).
iShares ESG MSCI USA ETF (ESGU - Free Report)
The fund seeks similar risk and return to the MSCI USA Extended ESG Focus Index while achieving a more sustainable outcome. The fund provides exposure to higher rated ESG companies while accessing large and mid-cap U.S. stocks. The fund has 311 holdings with an AUM of $275.7 million. It charges 15 bps in fees.
Nuveen ESG Large-Cap Growth ETF (NULG - Free Report)
The underlying TIAA ESG USA Large-Cap Growth Index comprises large-cap equity securities and meets ESG criteria and exhibits overall growth style characteristics based on long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate, long-term historical EPS growth trend & long-term historical sales per share growth trend. The fund has 118 holdings with an AUM of $51.9 million. It charges 35 bps in fees.
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