Ride the electric vehicle revolution.
When electric vehicle manufacturer Tesla (ticker: TSLA) entered public markets in 2010, there were plenty of naysayers talking about the viability of EVs. Over the intervening years, critics continued to wring their hands about whether EVs would always be a niche luxury purchase even as TSLA kept powering higher. Now, in 2021, there is undeniably an electric vehicle revolution underway — and the opportunities go far beyond just Tesla. President Joe Biden wants an all-electric federal fleet, and iconic automaker Jaguar said it will be only making EVs by the year 2025. If you want to tap into this powerful trend in transportation, here are seven of the top electric vehicle exchange-traded funds, or ETFs, to buy now.
Global X Autonomous & Electric Vehicles ETF (DRIV)
With more than $800 million in assets under management, DRIV is one of the largest electric vehicle ETFs out there. However, it’s worth noting that among its 75 or so holdings, the “autonomous” players outweigh the core EV companies. For instance, top holdings at present include Google parent Alphabet (GOOG, GOOGL), chipmaker Intel Corp. (INTC) and enterprise software icon Microsoft Corp. (MSFT). Those are hardly what you would call direct plays on electric vehicles, but these firms are involved with mobility solutions that go hand-in-hand with the next generation of automobiles. Familiar EV names are indeed featured, just further down the list of holdings. DRIV comes with an annual expense ratio of 0.68%, or $68 for every $10,000 invested.
KraneShares Electric Vehicles & Future Mobility ETF (KARS)
With just less than $200 million in assets, KraneShares offers a fund that is similar in name to the prior Global X electric vehicle ETF. The difference is the holdings are much more aligned with EVs than with the autonomous vehicle players that dominate DRIV. Near the top of the list right now for KARS is Nio (NIO), the dynamic Chinese electric car manufacturer that many think could give Tesla a run for its money in the region. There are some other software and chipmaker stocks on the list, but KARS seems to be more heavily weighted toward actual EV manufacturers than other funds on this list that are broadly interested in “mobility” technologies. The fund has a slightly higher expense ratio of 0.72%.
SPDR S&P Kensho Smart Mobility ETF (HAIL)
A roughly $250 million hybrid fund, this “smart mobility” ETF focuses on electric vehicle stocks as well as other emerging transportation technologies. This makes for a strange mix of components that includes electric car plays such as charging network operator Blink Charging Co. (BLNK) and hydrogen fuel cell player Plug Power (PLUG), but also AgEagle Aerial Systems (UAVS), which makes automated agricultural tractors and drones for use in farming applications. The good news is that this SPDR electric vehicle ETF rebalances regularly with an aim of being “equal weight” in all stocks, so the list of about 60 components won’t ever be too focused on one strange company at the expense of core EV firms. HAIL has an expense ratio of 0.45%.
iShares Self-Driving EV and Tech ETF (IDRV)
Another modest fund with about $300 million in assets, this iShares fund may have the longest list of total components with about 100 holdings at present. At the top of the list are favorites like Tesla, but you’ll also find traditional automakers such as General Motors (GM) and Toyota Motor Corp. (TM) that continue to invest heavily in EVs. There are also software and hardware firms helping to support this transition from the old automotive industry to the new. The number of legacy players may turn off investors who just want to play tomorrow’s electric vehicle leaders, but all in all, this is a great one-stop fund to play the broad trend of EVs in all forms. The expense ratio is 0.47%.
Amplify Lithium & Battery Technology ETF (BATT)
Of course, one way to cut out the old-school car companies is to forget about cars altogether and focus on the main component that is powering (pardon the pun) the EV revolution. That would be highly efficient lithium batteries that allow for extended ranges and rapid charging times. Top components among BATT’s 90 or so holdings at present include lithium miners like BHP Group (BHP) as well as companies like Tesla and Samsung that make the batteries themselves. BATT is the smallest fund on the list, at only about $125 million in assets, but it’s still a decent size to give investors a footprint in the battery sector if they are so inclined. Its expense ratio is 0.59%.
Global X Lithium & Battery Tech ETF (LIT)
At $3 billion in assets, LIT is actually the largest electric vehicle ETF on this list. It takes the approach of the prior lithium and battery ETF but in a more limited way, with only about 40 companies and roughly 25% of assets in the top three companies alone — Albemarle Corp. (ALB), Ganfeng Lithium Co. (GNENF) and Eve Energy Co. This focus is surprisingly sophisticated, with Ganfeng being a pink sheet offering not easily traded in the U.S. and Eve Energy only traded on Chinese exchanges. There is clear risk with a small list of stocks that can be illiquid, but in many ways, this is a strategy that’s perfect to explore via an ETF instead of individual stocks. You won’t find true EV manufactures other than Tesla, but it’s undeniable the holdings of LIT are powering the electric vehicle revolution. The fund has an expense ratio of 0.75%. The fund comes with an expense ratio of 0.75%.
ARK Innovation ETF (ARKK)
The last ETF on our list — as it’s not strictly an EV play — this innovation-oriented fund is by far the largest of the group with roughly $25 billion under assets. As you can imagine, innovative electric vehicle and battery companies make up a big share of the fund, with top holdings at present including Tesla at nearly 10% of the portfolio. Catherine Wood, founder, CEO and chief investment officer of Ark Investment Management has only added to the fund’s TSLA position in recent days as shares have slumped — a testament to the firm’s belief in the EV stock. For investors looking to cast a wide net on tech companies that, like EV firms, could be a vital part of the future global economy, ARKK is an interesting fund to buy.
Seven electric vehicle ETFs to buy:
— Global X Autonomous & Electric Vehicles (DRIV)
— KraneShares Electric Vehicles & Future Mobility ETF (KARS)
— SPDR S&P Kensho Smart Mobility ETF (HAIL)
— iShares Self-Driving EV and Tech ETF (IDRV)
— Amplify Lithium & Battery Technology ETF (BATT)
— Global X Lithium & Battery Tech ETF (LIT)
— ARK Innovation ETF (ARKK)
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