Elysabeth Alfano
Plant-Based Investing: Food Revolution ETF
Elysabeth Alfano isn't your typical ETF portfolio manager. She came to investing through Kellogg's brand management , running production, packaging, logistics, shipping, sales, and marketing for brands like Special K and Frosted Mini-Wheats. When she shifted her personal diet away from meat and dairy and started researching the business economics of the food supply chain, she found an investment thesis hiding in plain sight: the current system is catastrophically inefficient, and the companies disrupting it represent an enormous opportunity.
The Business Case for Food Disruption
The numbers Elysabeth rattles off are staggering. "It takes 25 to 35 calories of crop to get one calorie of beef." That conversion ratio drives deforestation for both animal feed crops and the animals themselves , "41% of the world's tropical deforestation comes from animal factories." Methane emissions: "32% of our world's global methane emissions comes from animal factories."
But she frames it entirely as a business problem, not a moral argument. "When I looked at the business equation of our current food supply system, it was so clearly ripe for disruption. It's bad for the business bottom line because it's bad for cost of goods sold because it's so inefficient." The disruption isn't about convincing Americans to give up meat , "Americans aren't giving up meat, we know that" , it's about finding more efficient ways to produce the same end product.
When she couldn't find an ETF investing in the companies working on this disruption globally, she and Dr. Sasha Goodman created EATV , the world's only plant-based innovation ETF. "The food system is eight trillion dollars. The meat industry is 1.4 trillion. I'll take 10% of that and be really happy for my ETF."
Up and Down the Supply Chain
EATV doesn't just invest in consumer-facing plant-based burger companies. The fund spans the entire alternative protein supply chain: ag-tech companies, ingredient companies, technology companies working on flavor and texture, and the consumer packaged goods companies at the end of the line. "We're investing in these ag-tech companies, these ingredient companies, these technology companies, these flavor and texture companies that are working out the innovations to make these products really taste great."
The innovation happening in agriculture technology specifically gets overlooked, Elysabeth argues. AI-powered lasers for weeding, precision farming, controlled-environment growing , "those of us who are in investments are focused on the big things like autonomous driving or AI, but we're not really focusing on all the technology that's helping us do things we've done for a long time, like growing corn."
Climate Impact: 3x to 40x More Effective
A Boston Consulting Group study compared the climate impact of investing in four disruption categories: alternative building materials, electric vehicles, alternative energy, and alternative proteins/plant-based innovation. The finding: "Investing in plant-based innovation is three times to 40 times more impactful than the others." The reason is capital efficiency , much of the existing infrastructure can be repurposed, so you get to impact faster with less capex.
Food Security as National Security
The conversation takes a geopolitical turn when Elysabeth connects food systems to national security. COVID and the Ukraine war exposed food supply chain fragility. "You can't be an independent country if you're relying on others for your food. And when you've got 1.4 billion people like China does, of course you're relying on others for your food." China is investing heavily in alternative proteins , growing meat from cells in controlled environments , specifically to reduce dependence on imported food.
This frames the alternative protein investment thesis beyond consumer trends: governments are treating food production technology as strategic infrastructure. Countries that develop the capability to produce protein independently, without the land and water requirements of traditional animal agriculture, gain genuine geopolitical advantage.
Elysabeth's pitch is fundamentally different from most ESG or impact investing narratives. She's not asking investors to sacrifice returns for values , she's arguing that the inefficiency of the current food system creates the investment opportunity. When it takes 35 calories of input to produce one calorie of output, and technology can improve that ratio dramatically, the economics drive the disruption regardless of anyone's dietary preferences. The question isn't whether the food system will change , it's which companies will capture the value when it does.
The portfolio construction is specific: roughly 80% food-related holdings (up and down the supply chain) and 20% materials (less beef means less leather, for example). The portfolio is approximately 30% small cap, 40% mid cap, and 30% large cap. More than half of the holdings are companies where less than 100% of revenue comes from old legacy food production , they're the innovators. Elysabeth notes that EATV screens rigorously on financials too: "We really screen for the financials." It's not enough to be mission-aligned; the companies have to be financially viable. The average American eats nearly 300 pounds of meat per year, compared to roughly 80 billion animals in factories globally. The scale of potential disruption is massive.
Key Takeaways
- Elysabeth Alfano isn't your typical ETF portfolio manager.
- When she couldn't find an ETF investing in the companies working on this disruption globally, she and Dr.
- Sasha Goodman created EATV , the world's only plant-based innovation ETF.
- I'll take 10% of that and be really happy for my ETF." EATV doesn't just invest in consumer-facing plant-based burger companies.
Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.
Full Transcript
6,961 wordsMachine transcribed from Brad Roth's conversation with Elysabeth Alfano, with speakers identified automatically. Timestamps link to that moment on YouTube. Lightly cleaned, otherwise unedited.
Welcome to Behind the Ticker. I'm Brad Roth, Chief Investment Officer of Thor Financial Technologies and Portfolio Manager of THLV, the Thor Low Volatility ETF. Behind the Ticker uncovers the inner workings of the ETF industry. We will interview portfolio managers and ETF service providers to dive deep into their work lives and their businesses. We will learn the inner workings of their strategies and what drives them as they continue to grow their company. Many of these individuals are entrepreneurs and will have unique and compelling insights to share as much goes on behind the ticker. Please note, nothing in this show is investment advice and it is meant solely for educational and entertainment purposes only.
Welcome to Behind the Ticker. Today we have Elizabeth Alfano. She is the founder of VegTech Invest and the Portfolio Manager of Eat V, which invests in food innovation companies. She is an expert in all things food and nutrition and we talk about some of the things that are issues with our food, how we produce food, make food, ship food, and I think you're going to find it extremely interesting. So I hope you enjoy this episode with Elizabeth Alfano. Elizabeth, welcome to the show.
Oh, happy to be here. Thanks for having me.
So before we get started, please explain for everybody who's listening kind of your background and how eventually you decided to start the VegTech plant-based innovation ETF.
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Sure, sure. Absolutely. So I've been, after graduate school, MBA, I've been working in food systems with the Kellogg Company, Special K, Frosted Mini Wheats. These were my brands and I worked on them not from just the brand management perspective, but from really running independent businesses, production, packaging, logistics, shipping, sales, marketing, et cetera. And I loved working in food and I loved working at the Kellogg Company, actually, the international company focused on healthy products, give or take, we'll say. So I had always had a penchant for working in food. And personally, I love to cook and I grew up in a household where my mother always cooked. So it comes naturally to me. Then at some point I shifted my own personal diet to no longer include meat and
Dairy. And I did that for health reasons and some other reasons, but I didn't do it for business or environmental reasons until I made the switch. And I started researching the inefficiencies of our current food supply system. For example, it takes 25 to 35 calories of crop to get one calorie of beef. So what that means is you deforest and you grow crops that have protein and fiber. Do you give that food to people? No, you give it to animals. Then you have to do more deforesting because the conversion ratio is so bad. That's just one example. And I could go on to give many like this statistic, 41% of the world's tropical deforestation comes from animal factories. So when I looked at the business equation
Of our current food supply system, it was so clearly ripe for disruption. And when I look at the business proposition of the replacements, much more efficient, much more sustainable, 32% of our world's global methane emissions comes from animal factories. I thought, well, this, this industry just isn't going to survive. Like, of course there's subsidies and they're lobbyists and they're holding on for dear life. And, but it's not a good business equation. It's bad for the business bottom line because it's bad for cost of goods sold because it's so inefficient. So I started looking at what are the companies that I could invest in personally that got the memo that saw the business proposition that saw the disruption potential and, sort of like computers, food is adopted by everyone. So it's not
Going to be this little shishi thing in Berkeley and Brooklyn. It's, it's going to be China, India, Europe, the U S old, new, young, educated, uneducated. it's one of those mass trends. When you shift food, not necessarily what people eat, people are still going to eat meat, but it's how that meat comes to them is going to be in a much more efficient way. When I looked at that, I thought, okay, I want to do the investing in these companies around the world that are working on this disruption. And when I couldn't find that in the public markets, I thought, okay, this product needs to exist. And so that's when Dr. Sasha Goodman and I created the world's only plant-based innovation ETF called EatV. Yeah. And that we're going to talk a little
Bit more kind of about the food and our food, the supply chain, because you and I had actually a discussion before this that was really educational to me. But before we kind of jump into that and talk about EatV, because I do want to dive deeper into the product, I always like to ask, what do you like to do outside the office? What are some of your hobbies when you're not working or you're not working on the ETF? Well, yeah, sort of as we discussed, just as I hopped on the phone,
I'm not on video today because as soon as this interview is over, I'm going to play tennis. So I do a lot of tennis, jogging, hiking, swimming. I try to stay really active pickleball. I just really like to get out. And of course, I love music and reading and I love traveling. I used to live in Paris, so it comes naturally to me to live in other countries. And I'll probably do that again. So there's so much going on in the world. It's easy to stay very busy.
Yeah. No, that's great. Sounds very active. I like to be active as well. I go crazy if I'm not active and pickleball came out of nowhere, it seemed like in the last couple of years. And I had to put one in my backyard. It's so much fun. So I can relate to it.
That's too funny. I love pickleball. I do. But the game of tennis is so elegant. I really do love it. And pickleball for me is more kind of fun and social than it is that racket sport of elegance.
But I have a great time and love doing it. Yeah. 100%. And the nice thing is, the way it's set up is almost any skill level can play with any skill level. It's easy to pick up. And so I can play with my six-year-old and it's fun. But I think let's talk... I want to talk about the food industry in general. I think more and more people are starting to understand that a lot of the food we consume overall is bad for us. It contains things, maybe our body doesn't really know how to process. So I kind of want to touch on just what are the major problems with our current food sources as you see them? I do want to talk about
The supply chain and the inefficiencies. But what do you see is kind of some of the main problems with our diets as Americans?
Ah, as Americans. Okay. Because there's a real global conversation here as well. Rising food insecurity around the world because how we produce food is so inefficient. So only some people are getting it and not others. Okay. But for... Well, according to our world and data, in the 50s, Americans used to eat, like a third of the meat that they eat now. Take a guess how many pounds of meat a year the average American eats.
I couldn't take a guess. I just know that my father-in-law is like a three steak a week guy. So... Lord. But it's probably a lot. Just a guess. Just... I'd say for meat, does that include chicken? Yes, it does. I'm going to say 200 pounds.
Yeah. Yeah. 290 as of 2019. 200, well, like 285 as of 2019. So now in 2023, it's almost 300 pounds of meat a year per person. Now I'm not eating any meat. So that means someone's eating more, just... My father-in-law. Okay. Now, hold on. Let's back that up a minute. Meat has no fiber. Now I know that's counterintuitive because you look at it and you're like, but wait a minute, it's fibrous. It has no fiber. That means we've got very long intestinal tracks. That means it's sitting in your intestinal track. That's why major cause of heart disease, diabetes, colorectal cancer. And that's regular meat. Now, if you're looking at processed meat, and that is a very large section of meat would be deli slices, bacon, sausage, hot dogs. These are class one carcinogens according to the
World Health Organization. So you, this over, it's one thing when people used to eat, like think of our grandparents, they'd have meat the size of their palm three times a week. We have long surpassed this. So too many animal proteins is really causing these lifestyle diseases that are really skyrocketing healthcare costs. And people say, oh, but we're living longer. I would actually argue that we're dying longer because we're living longer on pills. So, if you could pull back the food that has no fiber and put in the food that has fiber, you'd be doing, one would be doing oneself a world of good. There's also, not just the fiber, but meat has cholesterol.
It induces trimethylene N oxide. It has animal heme. It has antibiotics. It has hormones. So, anything one can do to cut back. Do I think the world is going vegan or plant-based? No one in their right mind thinks the world is going vegan or plant-based. It is not. We're talking about rolling back the unhealthy things, putting in the healthier things. And, and that's, that's a health conversation, which is very different than a business conversation about efficiencies and how to get more food that is more nutritious to more people in a shorter amount of time.
Yeah. And that's something I want to kind of touch on and talk about next is, it's very clear from your website. And when, when we talked that, a lot of this is also tied to, climate change. And so these companies that you're investing in, how does, how does technology and better, farming practices help the environment? And how, how can these advancements help with really making streamlining, farming and getting, getting the right food to the right people? Yeah. That's like seven questions in one. I know, but I want to learn from you. This is, like I said, it's very eyeopening. So I know it's a loaded question, but the floor is yours.
Yeah. So let me see how I can break that apart. Farmers come first. And there's a fascination, that the American farmer is in a position like old McDonald's farm or something. And the truth is large conglomerates have come in and they've bought up family farms. There are very few family farms left. And those family farms are squeezed into a very difficult position. So that's something in and of itself that we want to roll back and have better contracts, less debt and more options for farmers. So when you think about growing mushrooms, let's say, rather than animals, you're going to use less land. You're going to use less water. You're going to have to deforest less because you're not feeding animals that then give you this poor conversion rate. You can just go right for the protein and let's
Say mushrooms and either eat the mushrooms themselves or use them to make burgers and meats and steaks and this kind of thing. So better for the farmer to have these less environmentally damaging products and then their chance for better contracts. So that would be one sort of simplistic way. Now you talked about technology. And I love this because people often say like, oh, but wait a minute, I don't want technology in my food. I am sorry, folks, that ship sailed a very, very, very long time ago. That's why you now have seeds that can produce monocrops of soy that is not fed to people. It is fed to animals. And then again, we're back to deforesting for that bad conversion rate. So even the hybrid seed,
Of getting a certain kind of tomato, that sort of plant husbandry, if you will, that that's all part of better intelligence, better technology. So it's not that we don't want technology in our food, it's that we don't want harmful technology in our food. And there's a major distinction there. So when we invest in Eat V, we're investing in companies up and down the supply chain, that supply chain so critical to the business equation, to the investment proposition. And that's going to include these early ag tech innovations that help precision watering, for example. So we're better on land and we're better on water usage. It's going to work with the technology companies that are licensing out their IP. So you can have precision fermentation proteins. We'll talk about that in a second,
Or you can have more prolific ingredients. the original protein comes from plants, animals eat the plants, and then you get the animal meat, just go directly to the protein source. That's legumes and beans and other things, again, like mushrooms. So, you look at the highest protein on the planet, it's lentils, it's not beef. Anyway, so, so if you go to the source, these legumes and pulses and things, you can be more efficient with, you can have crop rotation, so better for less monocropping, cover crops, better for direct protein sources and using less land and water. So lots of efficiencies from having these alternative proteins worked into, as I say, either eating directly or as a steak themselves. But I digress a little bit, talking about that
Supply chain and eat V. So we're investing in these ag tech companies, these ingredient companies, these technology companies, these flavor and texture companies that are working out the innovations to make these products really taste great because Americans aren't giving up meat. We know that. So we got to get them what they want. And then the consumer packaged good products at the end of the line. So that's kind of the investment proposal up and down the supply chain. And I have no idea if I answered your original question, because there are so many questions in there. But that gives you kind of a sense for how we're starting to shift the food supply system to be more efficient. And when you're more efficient, you're more prolific. And that addresses food insecurity, which we can get to in a
Minute if you'd like to. Yeah. Well, why don't we walk into that? The reason I ask that question is I see so many different farming technologies, specifically, I saw now that they're using AI and lasers to help with weeding or killing certain things that are harmful to crops. There is so much innovation and technology that's happening in this space that I think those of us who are in investments are focused on the big things, right? Like autonomous driving or AI, but we're not really focusing on all the technology that's taking place that's helping us do very, I don't want to use the word simple, but things we've done for a long time, like growing corn.
Mm-hmm. Yeah, 100%. And just before we classify this as not major, the food system's $8 trillion. The meat industry is $1.4 trillion. I'll take 10% of that and be really happy for my EATV ETF. So this is a huge industry. And when the Boston Consulting Group did a study about investing in alternative products to impact greenhouse gas emissions, and they compared alternative building materials, electric vehicles, alternative energy, alternative energy, and alternative energy, and alternative energy. Because those are the four that are really impacting climate change, and we can talk about that.
And it turns out that investing in plant-based innovation is three times to 40 times more impactful than the others, all building materials, electric vehicles, and alternative energy. Because you don't need as much CapEx to invest in shifting over that system. A lot of the CapEx already exists. And so you can get to change faster, which means you can get to impact and climate change faster. So in terms of an impactful investment for greenhouse gas emissions, it's one right at our fingertips and one that we would be wise to spend, like we're spending on alt energy, we'd be wise to spend on alt protein. But you had said food insecurity. And the reason this is so important, even if you have no humanitarian interest here, is there's a national security interest aligned with
Food insecurity. So we're starting to see governments be very protective about their food IP, because we saw food supply chains fall apart during COVID. We saw it during the Ukraine war. This is why you see China investing so heavily in alternative proteins. You can't be an independent country if you're relying on others for your food. And when you've got 1.4 billion people like China does, of course, you're relying on others for your food. So they're looking at really alternative proteins, growing meat, because people are eating meat. That's what they're doing, folks. Growing meat in controlled scenarios. So you don't have to bother with animals, land, water, hormones, antibiotics, the whole thing. You can just grow from cells, the meat that you want, when you want it. But think about this, how many people can
Afford filet mignon? Very, very few. But if you're growing filet mignon cells in, what would be considered like a brew vat, like how you brew beer, but now you're brewing filet mignon. It's filet mignon for everybody, you know. So there's some food justice issues there as well, if you care about that. So, but primarily, this is what's important. I'm saying so much, and we're cramming a lot into a little time. But this is what's important about governments getting behind investing in food IP. You have the younger consumer, millennials and Gen Z. Millennials, by the way, not that young anymore. But okay, we'll call them younger and Gen Z, and I guess even Gen Alpha. Very much behind putting their dollars where their values are and not being detrimental to the planet. So they're really driving the growth of
Plant-based innovation. But you have government spending in IP at the same time that you have large food manufacturers coming under scrutiny from the SEC and others for the impact that they have on the planet. Where do you think, okay, take a guess. How many animals do you think are in factories right now? Just take a guess. Oh, geez. Around the world?
Yep. I'm going to say 2 billion. 80 billion. Okay, I wasn't even close.
10 times the amount of people on earth. 8 billion people on the planet, 80 billion animals in factories. Where do you think they go to the bathroom? Plush condos with indoor plumbing? No, it's your water. It's your land and water. So, we're talking about huge environmental footprint. These companies are all coming under scrutiny. So as supply chains become more transparent, as consumers care about this information and seek it out, they are under a magnifying glass, not just to better that business bottom line by reducing the cost of goods sold. Because right now, they externalize those costs. They get water for free. That's not going to happen as we move forward because you can see the shortages of water. So they've got pressure on them. So what's the
Important point there? Industry wants change. Government wants change. Consumer wants change all at the same time. So do I think this is some little vegan play with people on a street corner and a sign? No, no one is listening to them. I'm talking about consumer, government, and industry all wanting the same thing at the same time. Now they want it for different reasons, but they're all investing heavily. That's why we see this as a mega trend.
Yeah. No, I agree. I think the first time we were introduced via email, I made the assumption it's a vegan play. But when you start spelling out the thesis and you start really making the investment case for all the problems that need to be solved, as well as the scale and size of the problem, you make a very impelling investment case. And so I want to pivot into EatV, E-A-T-V. It's your VegTech plant-based innovation ETF. So we might have lightly through that kind of touched on the overall strategy, but can you talk about the strategy of EatV and really what it's trying to accomplish?
Sure. EatV, I would say, falls squarely under something called impact investing. So we are investing in the companies that are innovating to disrupt the global food supply system and that are working on food systems transformation to solve this business problem. We need to create more food that is more nutritious in a shorter amount of time using fewer resources while creating less damage. You can solve for that. This is what business does well. It takes a problem and it solves it at scale. You can solve for that. You're cashing in big. So we are investing in those companies that are solving that equation up and down the supply chain, starting with ag tech. And like we were saying, precision watering and these novel technologies, moving on to the companies that
Are focused just on the technology and licensing it out to others to use. And we can talk about the technology because there's cultivated meat, but there's also precision fermentation and hybrid products. So, you want to know what's coming on your plate in the next five years. We can get into that super fun. Then we talk about the ingredient companies working on novel proteins and the flavor texture companies. Then the CPG consumer product goods companies at the end of the line in food and materials. So ultimately we want sustainable supply chains and we find in the fund, it's a nice hedge to have 80% food, but 20% materials. So if you're making less beef, you're making less leather.
So you look at a company like Dole that upcycles its pineapple skins to make alternative leather, which is very cool. So we sort of see that as a, as a nice hedge, which gives us diversification, not only across the supply chain, but diversification across the globe and diversification across market caps. Cause we have small, mid and large cap, and then diversification across food and materials. Just a teeny notion here on the market caps. People often think, Oh, this must be a nano cap play or something. But okay. Just dispelling inaccuracies. People think this is a nano cap play for vegans. Okay. Couldn't be further from the truth. First of all, if you want real impact, you're going to have to go with the companies big enough to have ad budgets, large teams,
And huge distribution channels. So no one's going for nano caps. That makes no sense. And so, you have like Givaudin, for example, a hundred year old company out of Switzerland, they're doing it all. So they are focused on texture and taste working those flavors. They're also investing in innovation labs in the West coast of the United States. They're investing in alternative cultivated meat, growing meat from cells in Switzerland with a joint venture with Migros, which is the big grocery store there and Bueller, which is the big food equipment producer there. So you see them doubling down and that's what we want to see. Those that are putting in capex into the infrastructure so that when food hits, they're really well placed to, you know,
Winner take all, so to speak. So that would be an example of, mid large cap company, long established, not volatile, know what they're doing and positioning themselves to win big.
So you, you briefly touched on this. So in the ETF itself, do you stick to kind of the, do you stick to keeping, trying to keep the portfolio, 80% in kind of the tech and supply chain and 20% in materials? Is that something that you try to keep the portfolio waiting to?
Yeah. It's about 80% food, 20% materials and food up and down the supply chain at any point therein. And we primarily focus on those that are innovating to disrupt, but we've got a large universe of, almost a hundred companies and we make sure that they're truly innovating, not, not greenwashing, not, creating more chicken plants while pretending to have one little product that says plant-based or something, you got to like truly be focused on disruption. And then, then we really screen you for your financials. So then you have to make sure, of course, it's profitability, revenue, EBITDA growth, et cetera. And then we do a final screen again, just to make sure you play well in an ETF, just making sure the liquidity is there,
No problems therein, et cetera. So lots of methodology going into it, but after looking at over, a hundred companies globally, we usually land, we're actively managed. We usually land between 35 and 40.
Got it. And you led me perfectly into the next question. And so the fund is actively managed. And so how are you identifying the companies you want to invest in and then further, right? So it sounds like you, you have a screen, um, and can identify, a hundred or a couple hundred companies that kind of meet your criteria. And so how are you then whittling it down into kind of a more
Concentrated portfolio of say 30 to 40 names? Yeah. So, um, you've got that list of about a hundred and then you're just, again, making sure that the disruptive technology is a meaningful portion of the portfolio. So we really look to be, 80% or higher is not in old legacy food production. And, um, then we really screen for the financials. So once we've made sure that you are truly disruptive and that the majority of what you're doing is not in old legacy systems, because we want, when change comes and I get this quote from Cargill, when change comes in food, it's going to happen really fast because you don't need that capex spending that you need in other alts like alt energy. So it's going to happen really fast. So we don't want anyone that's
Hanging around in like the old way of doing things. And then we're really looking at the financials, and not just the financials, but what kind of moat do you have around your IP? What kind of IP do you have that maybe hasn't come to market yet, but we know is coming through our research, et cetera. So we like to see who's really, um, innovating again to kind of win big. And then that last screen to just make sure they play well in an ETF.
Sure. Uh, and just out of curiosity, I, because you're so passionate about the space, um, and, and are so knowledgeable about the space. Are you meeting with, or talking with management at all as you're doing due diligence? Um, or is it more of a, a check on financials, a check in, listening, reading or listening to shareholder reports about, the ability for them to maintain a competitive advantage. But the simple side of the question is, do you have the opportunity as a manager to kind of talk to management of some of
These companies? Sure. All the time. Yeah. All the time, because, I'm so knowledgeable about this subject, which is why I speak everywhere from Bloomberg news and intelligence to Berkeley, to Yale, to the United nations. I've done that three times. So, um, I often know the players who can replace, let's say way. So let's say you have a company that's really dedicated to disruption, but they still have, animal proteins, dairy proteins, like way hanging out in their products, just because they probably don't know that there are alternatives, which brings me to precision fermentation. So there are lots of substitutes for things like egg whites and, um, casein and way these animal proteins that are in things that have a much smaller sustainability
Footprint. And that only helps the company and that protects them from risk. So, and we are there to do that. We want them to, do better and not be subject to risky lawsuits or poor, um, sustainability numbers because everyone's looking at these things now. So we'll often say like, Hey, have you heard of perfect day? So perfect day is a company that's doing precision fermentation. What that means is they go to a scientific database. They don't even have to bother with animals. They go to a scientific database and they get the genes for casein. I'm like oversimplifying this, but they get the genes for casein and they grow those genes in a controlled scenario with plant-based sugars, et cetera. That's why we call them part of the plant-based innovation
Umbrella. And you grow them with plant-based feeds. And then ultimately you grow the casein that you need outside the animal and you can, or egg whites or whatever it is. And you can use that for cookies and baking, et cetera. And you're going to have a much better water usage, land usage, sustainability metrics. It's cleaner, so that's precision fermentation. But again, to the people who are saying like, Oh my God, that's freaky technology. Uh, I will just say pharmaceutical got this memo a long time ago. So they used to factory farm pigs for insulin. Then they realized pigs in factory farms live, but to snout on top of each other. It's why the United Nations says the next three reasons, the top three reasons for the next pandemic are related to eating meat and animal intensification
Because they're living in, this is why you have all the antibiotics. They live in such bad conditions that you end up spreading disease anyway. So the pharmaceutical industry said, we don't need the pigs. We'll just precision ferment what we need in a lab. And then we'll make all the insulin we need. And we won't have to deal with feces in the insulin and all these things, you've got feces in your chicken, right? You've probably seen all those studies. You just, the USDA allows up to 25% of all chicken to have salmonella when it leaves the door of any factory. Cause you can't control. It's just so messy. It's so inefficient. It's just a disruption, disruption, disruption. It's just such a messy supply chain. So,
Pharmaceutical got rid of that a long time ago and we'll get rid of it in food because it doesn't serve us. I grew up on meat. You eat meat. Everybody listening to this eats meat. It's served us so well for decades, but we have squeezed all the blood out of that stone. And there is not enough land and water to continue to make food in this inefficient way. And as China goes middle-class, India goes middle-class, Africa goes middle-class, those folks have money. They want to be eating meat. We don't have the land and water to do it for them. So not to mention the pandemic risk. So we're just going to make meat in a different way, but everyone's still going to get meat.
Well, kicking back real quick to investment strategy. When you then identify the companies that you're putting in the portfolio, how are you weighting those holdings? Are you doing it by company size? Is it equally weighted? how do you decide how much you want to invest in each
Company? Yeah, that's a great question. So Dr. Sasha Goodman is the portfolio manager on EatV and we do not do equal weighting. Again, we're actively managed and we do have an algorithm that we work with. And of course it's, we do it. It's not a machine doing it, but it's momentum-based and we can tweak the algorithm to be momentum-based, but risk mitigation, just because these have been tricky, volatile times. And then when we feel that we're out of the woods and we're not there yet, obviously everybody listening to this knows we're still in a tricky economy, then you can focus it more to be just on momentum. But that algorithm that we dial in for risk and momentum decides on the weightings. And then we double check those to make sure that they make
Sense. Makes a lot of, that makes a lot of sense. Um, I'm just, the first thing that comes into my head is, vegan quant, uh, stock selection here. So, um, put that on a, on a t-shirt and wear it around vegan quant. Um, love it. So what about rebalancing? I know it's active. Do you have a regular rebalancing schedule or how often are you kind of taking a look at the portfolio? I'm guessing from what I'm hearing from you, that this is a daily, a daily check. We check daily. That's a
No brainer. We check daily, but we try not to rebalance all of our testing has shown like your guests going to have the best results when you test quarterly. So we test quarterly, but we're actively managed, or excuse me, we rebalance quarterly, but we are actively managed. So we can go in and tweak as needed. And this is the beauty. And this is what you want, right? You don't want an actively managed thing to act like an index. So, um, there are movements in the market. There are movements in food, IPOs, et cetera, that you want to be there to take advantage of. Um, and, and things can swing. So we for sure quarterly, but then we look at it daily and we look
At companies daily and we're always deciding if we need to make any, any tweaks. Yeah. And so if
You're sitting down across the table from, um, an investment advisor, um, and how are you positioning EV as where would you put this or where would you advise, an investment advisor to put this in an overall model portfolio construction? Um, because like you said, you're investing across the gamut in terms of company size. You're also investing, globally. Um, so where would you sleeve this or what, what kind of is your pitch as to where it fits?
Yeah. There are two things that we discuss with, um, financial advisors and, and that is, you're really looking at high growth companies at low growth prices because the market hasn't priced in just how critical food transformation is and just how quickly it's going to change. So given our economic scenario where some things are still kind of depressed out there, if you're not in video, basically you're depressed, you're fine, but everybody else is kind of still depressed. So you're looking at high growth at low growth prices. So we talk to them about, even though we're 30% small cap, 40% mid cap and 30% large cap, we talk to them about, um, putting us in your small cap because we think small cap is highly undervalued and going to pop there or, um,
And that would be just for the person who has no sustainability umbrella, or if you have a sustainability sleeve, we haven't talked about that too much, but let's get into it super fast. This is a huge play at bringing down the carbon footprint of your investment portfolio. So we had a third party certifier ethos ESG, and they came up with our carbon neutral certification because we are not making the emissions to begin with. It's called emissions avoidance. So by replacing highly emittive products like meat and dairy with non highly emittive products, we have emissions avoidance. And that makes us carbon neutral through emissions avoidance. But then they took it a step further and they said, well, what would the global temperature warming potential be of ETV? So what
Do your companies collectively, their footprint, how's that going to impact global warming? And it came up with 1.18 degrees Celsius. So our global warming temperature potential is well under the 1.5 of the Paris Accords recommendation. So then we said, well, okay, compared to what? So they took the most common investment, that would be the S&P 500 index, that global temperature warming potential is 3.87. We all know the planet doesn't function at 3.87, almost four degrees increase. So, if you want a sustainability play, and whatever that is for your portfolio, 25%, 20%, 30%, or maybe it's 50% for younger generations, 25% for older generations, well, we should be a big chunk of that for you.
And then we discuss, are we going to be 10% of that sustainability portfolio? Where are we going to land therein? But we have a huge sustainability play. We're carbon neutral without buying offsets. And we, we're well under the Paris Accords global temperature warming potential. So lots of good there. Yeah. Zero exposure to deforestation, by the way. So, lots of good there.
Got it. Well, so I guess, kind of one more question before we wrap up. And this is, again, I really enjoy talking to you. I always seem to learn something new every time we talk. And it's very interesting. But from a business perspective, both of us are fairly newer issuers. So what challenges have you faced so far, kind of being a niche, a new issuer in the space, as far as trying to distribute the product and tell your story? Sorry, could you say that again? You're cutting
Out on my, I, I, so sorry, but you're cut out on my feed. I don't know why.
That's fine. No, I said, as a new, as a new ETF issuer, a newer ETF issuer, and also being a niche issuer, what challenges from a business perspective have you faced, just learning the business and also kind of through, the hardest part, it's easy. It's, I shouldn't say it's easy. It's easy to kind of come up with an idea and build a product. It's much harder to kind of run the business and make it a viable long-term product. So kind of, if you could, quickly kind of talk about some of the challenges you face and some of the things you're doing to kind of push the ball forward.
I think the biggest challenge is the one that you just mentioned. This is not niche at all. $8 trillion. It needs to be completely overhauled. I'm talking about the global foods system, $8 trillion. It doesn't work. And it needs to be completely overhauled. Meat is just 1.4 trillion of that, not even including the dairy aspect, but all of it needs to get revamped. we ship live animals from Australia to the Middle East, China, it just makes no sense. Oh my gosh. So these long transportation, the carbon footprint they're in is also awful. In addition to the animals and all the deforestation, just makes no sense. This is a, you eat three times a day and everyone does. This is not a niche
Product. I know people think it is. That's the biggest hurdle. So we always knew when we started this product that education would be key. And luckily I come to public speaking naturally and I am a food systems transformation expert. So I, I'm very comfortable educating, but I think people, they're so focused on solar panels and electric vehicles, and they don't realize that you simply will not impact climate change in the time that we need to do it. You don't address our food system. You just won't. That's ubiquitous. So we are not a niche product and it's hard to,
It's hard for people to wrap their mind around that. Well, Elizabeth, again, I really appreciate your time. I appreciate your, your knowledge. And most importantly, where can people learn more about
You and the firm and Eat V? Oh gosh. Well, you can go to eatvetf.com, see all our performance. We've been, beating the Russell 2000, which is really kind of where we play well. So just go ahead and check all that out. And then if you want to connect with me or you want to ask me questions, it all starts with education and people are fascinated by their food system or what's going to happen in their food system. So come find me on LinkedIn. I'm always happy to chat with people personally. And then for the ETF itself, go to eatvetf.com.
Well, again, Elizabeth, thank you very much. I really appreciate your time and your knowledge. And I hope to talk to you again in the future. Lovely. Thanks for having me. Sure. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye.
Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye.
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