According to Elysabeth Alfano, CEO of VegTech Invest, plant-based food innovation is the beginning of a long-term secular trend in transitioning to a cleaner and more climate-friendly environment.

So, she decided to launch a fund to invest in companies innovating in this space. As a result, the VegTech Plant-based Innovation and Climate ETF (EATV) was born at the end of 2021.

The fund is actively managed and invests in companies along the plant-based foods and materials supply chain. The ETF is also certified carbon neutral.

“I found in my consulting work there actually was a big white space in the public markets for the ETF,” said Alfano, who’s always worked in food systems and innovation, and has an entrepreneurial spirit. “I believe it’s going to have a huge growth spurt, and I wanted to have exposure to that.”

The fund focuses on novel innovations and technologies. Those include plant-based foods and innovation, precision, and bio-fermentation technologies. It also invests in companies that develop cultivated meat and 3-D printing technologies and those along the supply chain.

The goal is to select companies that “are innovating with plants to replace inefficient food and materials systems and products with sustainable alternatives.”

Investments include firms that focus on the supply chain, AgTech, ingredient, flavor, texture, and consumer packaged goods. In addition, portfolio manager Dr. Sasha Goodman eliminates names with poor performance based on financial metrics, competitive advantage, historical price returns, and liquidity. 

Photo Courtesy VegTech Invest

Also screened are companies whose primary products involve industrial animal agriculture and those that conduct animal testing unless required by law to bring a product to market, she explained.

For example, the top holding among 53 names in the fund is Lamb Weston Holdings. The company is the world’s second-largest producer of potato products, but it has also invested in alternative proteins grown from fermented potatoes.

It’s a “very clean protein, very resource-efficient and time-efficient,” she added. “So, that’s an example of a supply-chain company.”

Ingredion is the second-largest holding in the fund and, as its name suggests, makes ingredients for the food and beverage industries. The company has also expanded into novel ingredients and plant-based proteins from peas, lentils, fava beans, and chickpeas.

A company infographic refers to studies that state “a legume-based meal is associated with 8x lower greenhouse gas emissions than a beef-based meal” and “Pulses have a low carbon footprint and therefore need less nitrogen fertilizers, reducing greenhouse gases and water pollution.” 

Photo Courtesy VegTech Invest

In addition, “Pulses are some of the most water-efficient foods, requiring only 43 gallons per pound compared to” some of the other ingredients such as chicken or beef. 

Interestingly, the fund also holds electric vehicle maker Tesla.

“Tesla was the first car company that said that they would not have animal leather and that they would only have vegan leather,” she explained. “And this forced the competition – Mercedes and BMW – to go 50% vegan leather.” A tannery’s use of chemicals is very detrimental to the planet.

She added that this “is extremely meaningful because automobile leather is only second to shoe leather in terms of how much leather is out there.” EATV invests in a blend of value and growth stocks. In addition to plant-based food companies, it also invests in plant-based materials companies producing animal-free leather and animal-free collagen for the cosmetics industry.

Photo Courtesy VegTech Invest

E.l.f. Beauty is a global cosmetics company that makes 100% cruelty-free and vegan makeup and skincare products worldwide. Cosmetics are never tested on animals and contain no animal ingredients.

Other fund holdings include plant-based agriculture technology companies, such as those involved in indoor vertical farming, as well as robotics. Alternative protein firms use innovative techniques of precision fermentation, cell-based agriculture, and other new technologies.

“We see the global food supply system as no longer being able to efficiently and sustainably feed a growing population, and its innovation cycle is exhausted,” said Alfano. 

She added: “Whereas the innovation cycle for plant-based innovation – a foundational pillar of an ameliorated food system, is just beginning. So, taste is just about there, and as soon as we have price parity, that’s when you’re going to have mass adoption.”