Newly formed investment advisor VegTech Invest has debuted an ETF providing thematic exposure to companies that are innovating using plants and plant-based derivatives.
The ETF provides exposure to companies that are innovating using plants and plant-based derivatives.
The VegTech Plant-based Innovation & Climate ETF (EATV US) has been listed on NYSE Arca and comes with an expense ratio of 0.75%.
The actively managed fund invests in large, mid, and small-cap companies worldwide that derive at least 50% of their revenue from, or dedicate at least 50% of their assets to, plant-based innovation.
Examples of potential constituents include plant-based food and ingredient companies behind popular products such as the Beyond burger, and plant-based materials companies producing animal-free squalene and animal-free collagen for cosmetics.
The plant-based food industry is rapidly expanding with data from SPINS, a wellness-focused analytics company, from April 2021, showing that plant-based food sales grew 27% in the preceding year, nearly twice as fast as overall food sales.
Growth is expected to continue with Boston Consulting Group predicting that the plant-based food industry is estimated to grow 740% from $39 billion to $290bn by 2035.
The strategy goes beyond this to also capture plant-based technology companies such as agricultural innovators utilizing indoor vertical farming, robotics, and manure substitutes, as well as alternative protein companies transforming plant-based carbohydrates and other ingredients into protein through precision fermentation and cell-based agriculture.
These companies are positively affecting climate change while addressing other pressing problems such as food security, deforestation, and animal cruelty. According to VegTech, this focus on innovating and improving the inefficient food and materials supply chain represents a favourable long-term secular growth trend. The firm highlights that growth in the global population from 7.7bn to almost 10bn by 2050, according to UN estimates, necessitates a more efficient plant-based food system that uses less land and water and emits fewer greenhouse gases.
As of the end of December, the fund had 37 holdings with the most notable positions being Beyond Meat (8.6%), MGP Ingredients (8.1%), Amyris (7.2%), ELF Beauty (6.8%), and Oatly (5.2%).
Elysabeth Alfano, CEO of VegTech Invest, said: “We are excited to be what we believe is the first pure-play ETF that invests in companies innovating with plants and producing animal-free products. We believe that today’s investors want a more resource efficient, climate friendly, and cruelty-free food and materials supply system…and want to invest their dollars in the same. We are excited to offer an ETF that empowers the average person to invest with their values and participate in this large-scale, secular trend.”
Sasha Goodman, President and Fund Manager at VegTech Invest, added: “With this ETF, I am excited to drive capital to plant-based innovation companies. I also hope to encourage public companies to lead the way and replace animal products with innovations that are better for people, the planet and the animals.”
The fund is the first ETF to adopt a vegan philosophy as its core investment mandate, setting it apart from the $80 million US Vegan Climate ETF (VEGN US) which provides broad exposure to US large-cap stocks while screening out companies based on ESG, climate, and animal cruelty criteria.
Investors interested in thematic strategies on food technology may also wish to consider the Global X AgTech & Food Innovation ETF (KROP US) and VanEck Future of Food ETF (YUMY US) which come with expense ratios of 0.50% and 0.69%, respectively. Neither ETF has yet to accumulate significant assets.