The Top 3 Vegan ETFs in 2022 (US Vegan Climate ETF (VEGN) Review)
Consumers are becoming more concerned about agricultural sustainability, and vegan and sustainable food is a major trend. It is also an investment opportunity. There are three exchange-traded funds marketed as vegan or sustainable. However, they invest in very different things. Which one should you pick?
SustainFi Updated December 31st, 2021
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Is there a vegan ETF?
As of December 2021, there are three vegan or sustainable food ETFs marketed to U.S. investors. The U.S. Vegan Climate ETF (VEGN) is the oldest vegan fund, taking an exclusionary approach. It invests in large company stocks, excluding businesses that test on animals or sell animal products. However, VEGN doesn’t actually invest in plant-based stocks. It’s like the S&P 500 without animal products.
If VEGN’s exclusionary approach is not what you’re looking for, you have two more options, the VanEck Future of Food ETF (YUMY) and the VegTech Plant-based Innovation & Climate ETF (EATV). Learn more about each option.
Vegan and Plant-Based Food ETFs
|Fund / Ticker||Investments||Expense Ratio||Assets ($m)||2021 Performance|
|U.S. Vegan Climate ETF (VEGN)||Large-cap stocks, mostly tech and financials||0.60%||76||29.7%|
|VanEck Future of Food ETF (YUMY)||Agriscience and plant-based food stocks||0.69%||2.5||-|
|VegTech Plant-based Innovation & Climate ETF (EATV)||Plant-based food and tech stocks||0.75%||<1||-|
1. U.S. Vegan Climate ETF (VEGN)
- Expense ratio: 0.60%
- Assets: $76 million
- 2021 performance: 29.7%
The first vegan-themed ETF to launch in the U.S., the U.S. Vegan Climate ETF (VEGN) was created in 2019 by Beyond Investing. The fund seeks to invest in large-cap stocks of companies that do not harm or exploit animals. It also applies environmental, social, and governance (ESG) screens like avoiding fossil fuels and tobacco.
The fund costs 0.60% ($6 on a $1,000 investment annually) and tracks Beyond Investing’s U.S. Vegan Climate Index. As of December 2021, VEGN has attracted $76 million in assets under management, not bad for a relatively new fund from a first-time issuer.
How does VEGN invest?
The fund takes 500 large-cap U.S. stocks and excludes any companies that derive over 2% of revenues from testing on animals, animal products, animal use in sports or entertainment, fossil fuels, tobacco, and weapons. Each stock is capped at 5% of the fund.
VEGN has 271 holdings, around half of the S&P 500. The fund mostly invests in large-cap tech stocks, which are over 50% of the ETF. Other large sectors are financials and consumer cyclicals. It makes sense: large tech companies and credit card companies don’t test on animals.
Compared to the S&P 500, VEGN owns many more tech stocks, and fewer healthcare and energy stocks. Top holdings are Tesla, chip manufacturer NVIDIA, insurer UnitedHealth, and credit card companies Visa and Mastercard. Pharma companies like Covid vaccine manufacturers Pfizer and Johnson and Johnson are absent.
How has VEGN performed?
In 2021, VEGN returned 29.7%, compared to 30% for the S&P 500 Index. Since its 2019 launch, VEGN has done better than the S&P 500, returning 25.4% vs. the S&P 500’s 21.7%. But the fund did better because large tech stocks, including Tesla, have beaten the market, and VEGN owns more tech than the S&P 500. So future outperformance depends on how large tech companies do.
Is VEGN ETF expensive?
VEGN costs 0.60%, which isn’t cheap for a fund that tracks an index. Vanguard’s S&P 500 ETF (VOO) costs only 0.03%. You can also buy cheaper socially responsible funds like the iShares ESG Advanced MSCI USA ETF (USXF), which costs only 0.10%, though socially responsible funds don’t exclude animal testing.
Is VEGN what vegan investors are expecting?
VEGN takes an exclusionary approach; it doesn’t try to make an impact with your money. Yes, VEGN excludes companies that test on animals, so it ends up mostly investing in tech and financial companies. But it’s not big on vegan or plant-based stocks. For example, VEGN owns Beyond Meat, but that stock is less than 0.1% of the fund. Of course, there aren’t many publicly traded vegan companies. Still, one would expect a vegan ETF to have more exposure to plant-based food.
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2. VanEck Future of Food ETF (YUMY)
- Expense ratio: 0.69%
- Assets: $2.5 million
Launched in November 2021, the VanEck Future of Food ETF (YUMY) is an actively managed ETF that invests in global companies engaged in sustainable agriculture or food innovation.
The fund picks stocks in three categories:
- Food technology, such as alternative proteins
- Precision agriculture, such as indoor farming
- Agricultural sustainability
Stocks are selected using research and fundamental analysis. The goal is to find companies that can outperform by feeding the growing global population and doing so sustainably.
The top three holdings, out of roughly 50, are Corteva, a seed company, Oatly, and the flavor and ingredient developer Givaudan.
Although YUMY is not a vegan fund, it’s actually a better way of investing in plant-based stocks than the VEGN ETF. The fund owns stocks like Oatly (the second largest holding at around 4% of the ETF), Tattooed Chef (3.2%), Beyond Meat (2.8%), and other plant-based innovators.
However, YUMY does not shun animal product manufacturers with sustainable alternatives. For example, it owns stocks in companies that sell meat if they are investing in plant-based proteins too (like meatpacker Tyson.)
A new fund, YUMY has $2.5 million in assets and costs 0.69%, which is typical for an actively managed fund that seeks to beat the market. However, it’s too early to tell what performance will be like.
3. VegTech Plant-based Innovation & Climate ETF (EATV)
- Expense ratio: 0.75%
- Assets: <$1 million
The newest vegan fund to launch, the VegTech Plant-based Innovation & Climate ETF (EATV) started trading in December 2021. EATV is an actively managed fund that seeks to invest in innovative companies in plant-based food and technology.
The top holdings are the biotech company Amyris, wheat protein manufacturer MGP Ingredients, and Beyond Meat. The fund also owns Oatly and beverage makers like Celcius Holdings and National Beverage Corp. Vegan cosmetics and personal product manufacturers like elf Beauty and Olaplex are also present.
The fund was launched by VegTech Invest, a new manager, and run by Sasha Goodman and Dustin Lewellyn.
Although EATV is pricey (0.75% expense ratio), and the performance record of the management team remains to be seen, it is the only pure-play plant-based ETF in the market today.
💰 Which vegan ETF is best?
- VEGN is best if you want to avoid companies that test on animals, are prepared to pay top dollar, and are ok with owning a lot of big tech stocks. It is not the best fund if you want to own plant-based company stocks.
- YUMY is a fund that invests in the future of food. It’s a good way to get exposure to agriscience and plant-based food stocks, but the fund doesn’t shun animal products, for example, if the manufacturer is investing in plant-based alternatives. It’s a better option for non-vegans who want to invest in the future of food, including plant-based foods.
- EATV is the only pure-play vegan ETF that invests in plant-based foods and shuns animal products. Although it’s the most expensive vegan ETF and its manager is unproven, EATV is the only way of accessing vegan and plant-based stocks if you don’t want to pick them yourself.
🔔 Looking for vegan stocks? Check out this list of vegan and plant-based stock ideas.
NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.
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