The US Vegan Climate ETF (VEGN) seeks to track an index of companies that meet both vegan and climate-friendly criteria, excluding businesses involved in animal products, testing, or exploitation while prioritizing those with strong environmental sustainability practices and low carbon footprints.
How It Works
VEGN employs a rules-based screening methodology that first excludes companies deriving revenue from meat, dairy, leather, cosmetics testing on animals, and other animal-related industries. The remaining universe is then filtered for climate leaders based on carbon intensity, renewable energy usage, and environmental scores. Holdings are weighted by market capitalization with quarterly rebalancing to maintain alignment with screening criteria and index changes.
Key Features
- First ETF combining vegan ethical screening with climate change investing, targeting the intersection of animal welfare and environmental sustainability
- Zero expense ratio structure makes it cost-competitive for values-based investors seeking both ethical and environmental alignment
- Recent 2022 launch means limited performance history but captures growing demand for ESG investing with specific ethical constraints
Risks
- This ETF can lose value if vegan or climate-focused companies underperform broader markets, as ethical screening significantly limits investment universe and diversification
- Concentrated exposure to specific sectors favored by screening criteria could amplify losses during sector-specific downturns or regulatory changes affecting clean technology companies
- As a new fund with minimal assets, liquidity constraints and potential closure risk exist if investor interest doesn't materialize sufficiently
Who Should Own This
Best suited as a satellite holding (5-15% of equity allocation) for values-driven investors with 3+ year time horizons who prioritize animal welfare and climate concerns alongside financial returns. Requires high risk tolerance due to concentrated sector exposure and new fund risks. Appeals to vegans and environmentally conscious investors willing to accept potential performance trade-offs for ethical alignment.