EV infrastructure investment is ramping up.
The price of lithium has skyrocketed in recent months, while tech stocks have sold off. None of this bodes well for electric vehicle manufacturers in the short term, but the burgeoning industry still has a bright future. In 2020, more than 10 million electric cars were already traveling the world’s roads. In February, the Biden administration unveiled a plan to provide $5 billion in funding for EV charging across the U.S. The announcement came on the heels of President Joe Biden saying back in August 2021 that EVs are the future of the car industry. With this kind of top-down support, any recent drop in EV securities may have more to do with short-term geopolitical events than long-term trends. One way for investors to minimize shocks to individual stocks is to invest in exchange-traded funds. Here are seven of the best EV ETFs to buy now.
Global X Lithium & Battery Tech ETF (ticker: LIT)
This fund isn’t a direct play on EVs themselves. Rather, it offers exposure to global EV or lithium equities, which are crucial to the EV revolution. LIT is rated four stars by Morningstar, with a one-year return of 20% and $4.8 billion in assets under management. This passively managed fund tracks the Solactive Global Lithium Index, which comprises some of the largest lithium explorers and miners in the world. Companies in this fund are affected by commodities pricing, so keep that in mind as lithium prices continue to climb. More than 25% of LIT’s total portfolio is in the fund’s top five holdings: Albemarle Corp. (ALB), TDK Corp. (TTDKY), Tesla Inc. (TSLA), Contemporary Amperex Technology Co. Ltd. (300750) and Yunnan Energy New Material Co. Ltd. (002812). LIT’s expense ratio is 0.75%, or $75 for every $10,000 invested annually.
Global X Autonomous & Electric Vehicles ETF (DRIV)
Another passively managed fund from Global X, DRIV is a direct play on the EV space. This is one of the oldest EV ETFs out there, which is also why it’s one of the largest. DRIV has $1.2 billion in assets under management and an expense ratio of 0.68%. The fund tracks the Solactive Autonomous & Electric Vehicle Index, which is composed of companies that manufacture EVs, their components or those that produce raw materials necessary for EV production. DRIV’s top-five holdings of Alphabet Inc. (GOOGL), Apple Inc. (AAPL), Qualcomm Inc. (QCOM), Intel Corp. (INTC) and Nvidia Corp. (NVDA) make up about 15% of the fund’s total portfolio. The fund is down so far this year, meaning it could be a good time to buy the dip if you’re taking the long view.
iShares Self-Driving EV and Tech ETF (IDRV)
Founded in April 2019, IDRV has a lifetime total return of 81.4% as of March 3. With $557 million under management, IDRV is roughly half the size of the aforementioned DRIV. IDRV tracks the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index, which is composed of global autonomous vehicle and EV companies. Although the weightings are different, IDRV and DRIV have very similar top holdings. IDRV’s top-five holdings are Apple, Toyota Motor Corp. (TM), Qualcomm, Intel and Alphabet. One of IDRV’s key differentiators is cost: The fund’s expense ratio is only 0.47% versus DRIV’s 0.68%.
KraneShares Electric Vehicles and Future Mobility ETF (KARS)
Founded in January 2018, KARS has a five-star rating from Morningstar, which is the highest historical performance rating a fund can receive from the analyst firm. KARS has a total return of 70.4% since inception, but it is down more than 20% so far this year due to rising inflation and other geopolitical events like Russia’s invasion of Ukraine. KARS is a passively managed ETF tracking the Bloomberg Electric Vehicles Index. This index attempts to track the entire EV industry from lithium mining to battery and vehicle production. KARS has $297 million under management and an expense ratio of 0.7%.
Amplify Lithium & Battery Technology ETF (BATT)
Another battery-focused ETF, BATT is significantly smaller than LIT, which is the other battery ETF included in this list, with only $215 million under management versus LIT’s $4.8 billion. BATT costs significantly less, however, with an expense ratio of 0.59%. BATT is another passively managed fund tracking the EQM Lithium & Battery Technology Index. This index tracks global companies that mine and produce battery materials. Although this is a similar index to LIT’s, BATT’s top-five holdings are very different. These holdings are BHP Group Ltd. (BHP), Tesla, Contemporary Amperex Technology, BYD Co. Ltd. (BYDDF) and Glencore PLC (GLNCY). The only company LIT and BATT both hold in their top-five holdings is Tesla.
SPDR S&P Kensho Smart Mobility ETF (HAIL)
HAIL was founded in December 2017, making it the the second-oldest ETF on this list after LIT. A passively managed fund, HAIL tracks the S&P Kensho Smart Transportation Index. The stocks on this index are U.S.-listed developed and emerging market companies in the smart transportation sector. HAIL has 85 equity holdings in its portfolio, and only 17% of its total assets are in the top 10. HAIL is rated two stars by Morningstar and has a total return of 59% since inception. With just $116 million under management, HAIL is still a relatively small fund, but it does have a competitive expense ratio of 0.45%.
Fidelity Electric Vehicles and Future Transportation ETF (FDRV)
At only 0.39%, FDRV has the lowest expense ratio on this list. Founded in October 2021, however, FDRV is also the newest ETF on this list and has only $40 million under management. Unfortunately, market conditions haven’t favored it so far, and it’s lost more than 13% since inception. On the bright side, Fidelity is an established and well-respected fund manager, so this ETF should have a solid future once the market picks up again. This passively managed ETF tracks the Fidelity Electric Vehicles and Future Transportation Index. Like the other EV funds on this list, this index tracks a global basket of companies engaged in producing EV and autonomous transportation technology. FDRV’s top holdings include many familiar faces from the other ETFs on this list, including Intel, Qualcomm, Nvidia, Tesla and Uber Technologies Inc. (UBER).
Seven electric vehicle ETFs to buy:
— Global X Lithium & Battery Tech ETF (LIT)
— Global X Autonomous & Electric Vehicles ETF (DRIV)
— iShares Self-Driving EV and Tech ETF (IDRV)
— KraneShares Electric Vehicles and Future Mobility ETF (KARS)
— Amplify Lithium & Battery Technology ETF (BATT)
— SPDR S&P Kensho Smart Mobility ETF (HAIL)
— Fidelity Electric Vehicles and Future Transportation ETF (FDRV)
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7 Electric Vehicle ETFs to Buy originally appeared on usnews.com
