With stocks such as Nio (NYSE:NIO) and Tesla (NASDAQ:TSLA) in the midst of seemingly undaunted ascents, electric vehicle ETFs are among the examples of thematic exchange traded funds stepping into the spotlight.
For many investors, particularly those priced out of Tesla or those new to this space, electric vehicle ETFs make a lot of sense. The funds remove the need for investors to identify the best individual names, over diversity and many lack significant exposure to some of the more challenged EV stocks.
Additionally, these thematic ETFs make for ideal plays on the Biden Administration’s renewable energy priorities, including the president-elect’s goal of building 550,000 EV charging stations over the next decade, which would reduce concerns about time in between charges, likely boosting EV demand in the process.
The new president probably won’t be able to put an EV in every driveway, at least not anytime soon, but this administration and Congress are viewed as hospitable to the auto industries electric evolution and that could benefit the following electric vehicle ETFs.
- Global X Autonomous & Electric Vehicles (NASDAQ:DRIV)
- KraneShares Electric Vehicles & Future Mobility ETF (NYSEARCA:KARS)
- SPDR Kensho Smart Mobility ETF (NYSEARCA:HAIL)
- iShares Self-Driving EV and Tech ETF (NYSEARCA:IDRV)
- Global X Lithium & Battery Technology ETF (NYSE:LIT)
Electric Vehicle ETFs: Global X Autonomous & Electric Vehicles ETF (DRIV)
Expense ratio: 0.68%, or $68 annually on a $10,000 investment
The Global X Autonomous & Electric Vehicles ETF is reflective of the newness of the EV investing concept. DRIV turns three years old in April and is one of the oldest ETFs in this category. With $311.20 million in assets under management, it’s also one of the largest.
DRIV holds 76 stocks, which is a fairly deep bench for an electric vehicle ETF and none of its holdings exceed a weight of 5.16%. Tesla and Nio are DRIV’s largest and third-largest holdings, respectively, combining for about 8% of the ETF’s roster. Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA) are also found among the fund’s top 10 holdings.
Exposure to those two traditional tech names is another indication of DRIV’s depth – the ETF features exposure to five sectors led by consumer cyclical and technology. DRIV is also geographically diverse as stocks from a roughly a dozen countries are represented in the fund. Positioned as an EV ETF, DRIV offers surprising depth into the broader renewable energy ecosystem and is a credible avenue for EV derivatives (think semiconductors).
KraneShares Electric Vehicles & Future Mobility ETF (KARS)
Expense ratio: 0.72%
KraneShares is usually known for its nifty lineup of China and emerging markets funds, but investors shouldn’t sleep on the KraneShares Electric Vehicles & Future Mobility ETF. KARS turns three years old next week and has $101.40 million, confirming there’s room for competition in the electric vehicle ETF arena.
KARS tracks the Solactive Electric Vehicles and Future Mobility Index and similar to the aforementioned DRIV, the KraneShares fund goes beyond vehicle manufacturers to touch multiple corners of the EV landscape. In fact, Tesla isn’t a KARS component and five of its top 10 holdings, including Nvidia, are semiconductor equities.
KARS capitalizes on KraneShares strong China competency as many of the ETF’s holdings, including Nio, are Chinese companies. That’s relevant to investors because the world’s second-largest economy is the biggest EV market.
SPDR Kensho Smart Mobility ETF (HAIL)
Expense ratio: 0.45%
The SPDR Kensho Smart Mobility ETF isn’t a dedicated electric vehicle fund. Rather, it’s a broad based play that’s arguably the most futuristic transportation ETF on the market. Looking for old guard airlines, freight haulers and railroad operators? Look elsewhere because HAIL delivers transportation’s tomorrow today.
The underlying benchmark, the S&P Kensho Smart Transportation Index, provides exposure to “the areas of autonomous and connected vehicle technology, drones and drone technologies used for commercial and civilian applications, and advanced transportation tracking and transport optimization systems,” according to State Street.
Home to 59 stocks, HAIL offers an expansive lineup that features EV manufacturers, such as Nio and Tesla, charging station operators, auto parts makers and semiconductor producers. Overall, more than 20 industry groups are represented in this SPDR ETF and its 0.45% expense ratio is among the lowest in the category.
iShares Self-Driving EV and Tech ETF (IDRV)
Expense ratio: 0.47%
The iShares Self-Driving EV and Tech ETF follows the FactSet Global Autonomous Driving and Electric Vehicle Index and is one of the more basic EV ETFs on the market, but that’s not a slight because the iShares fund is higher by 67.4% over the past year,
IDRV’s roster makes for an easy comp with the aforementioned DRIV as the iShares fund features allocations to Tesla and Nio as well as Apple and Nvidia. However, the rivals aren’t mirror images of each other because the Global X fund sharply outperformed its iShares competitor over the past year while IDRV offers a much lower fee.
IDRV offers a bit more depth with 100 components, but the bottom line in this mini rivalry is that investors shouldn’t not hold both ETFs at the same time because there’s too much overlap.
Global X Lithium & Battery Tech ETF (LIT)
Expense ratio: 0.75%
The Global X Lithium & Battery Tech ETF was an EV ETF before there were real EV ETFs, which is to say the $2.63 billion four-star rated fund turned 10 years old last July. At that age, it’s also fair to say LIT is one of the pioneers of the thematic ETF movement.
LIT’s success attributable to several factors, not the least of which are early adopters’ willingness to bet on increased demand and Global X seeing past near-sighted critics that, a decade ago, call LIT too focused a fund to gain widespread acceptance. These days, LIT ranks as one of the premier avenues for accessing the “ingredients” side of the EV story and the fund is higher by 158% over the past year – a stellar showing considering Tesla isn’t even 6% of the fund’s weight.
“At a high level, the industry’s ecosystem starts upstream with lithium miners that extract the metal from the earth,” according to Global X research. “These raw materials then move into the chemical conversion process to produce lithium carbonate or lithium hydroxide. Battery producers combine carbonate or hydroxide with materials to form a cathode and an anode, together forming an individual battery cell. Thousands of cells may be combined to create a battery pack for an EV.”
On the date of publication, Todd Shriber did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Todd Shriber has been an InvestorPlace contributor since 2014.
