The electric vehicle (EV) industry continues to be hamstrung by a global semiconductor chip shortage. Nevertheless, EVs are expected to dominate the automotive market in the future as governments worldwide support measures to help the industry’s growth to address climate change concerns.
President Biden’s proposed infrastructure plan includes significant spending directed at the EV industry. For example, he proposes to build 500,000 EV charging stations by 2030. According to a SpendEdge report, the EV market is expected to grow at a 20% CAGR between 2019 - 2024. But because it's difficult to select the best, individual stocks in the overcrowded EV space, investors looking to capitalize on the industry’s growth in a less risky way could bet on ETFs exposed to EV stocks.
Global X Autonomous & Electric Vehicles ETF (DRIV), iShares Self-Driving EV and Tech ETF (IDRV), and Capital Link NextGen Vehicles & Technology ETF (EKAR) are three such ETFs that we think are well-positioned to generate healthy returns in the coming quarters. So, it could be wise to bet on them now.
Click here to checkout our Electric Vehicle Industry Report for 2021
Global X Autonomous & Electric Vehicles ETF (DRIV)
DRIV is an exchange traded fund that was launched and is managed by Global X Management Company LLC. It invests in the shares of the companies that operate in the development of EVs and/or autonomous vehicles. The fund seeks to track the performance of the Solactive Autonomous & Electric Vehicles Index.
With $875.20 million in AUM, DRIV’s top holding is Alphabet Inc. (GOOGL), which has a 3.99% weighting in the fund, followed by Microsoft Corporation (MSFT) at 3.44% and NVIDIA Corporation (NVDA) at 3.42%. The fund has a 0.68% expense ratio, which is slightly lower than the 0.71% category average.
DRIV pays a $0.07 annual dividend, which yields 0.26% at the prevailing share price. The ETF’s average four-year dividend yield stands 1.29%. DRIV has gained 101.8% over the past year and nearly 58% over the past nine months.
DRIV’s POWR Ratings are consistent with its growth outlook. It has an overall B rating, which equates to Buy in our proprietary rating system. It has an A grade for Buy & Hold, and a B for Trade.
DRIV is ranked #38 of 110 ETFs in the B-rated Technology Equities ETFs group. In addition to this, one can see DRIV’s Peer grade here.
iShares Self-Driving EV and Tech ETF (IDRV)
Launched by BlackRock, Inc. (BLK), IDRV is an exchange traded fund that is managed by BlackRock Fund Advisors. The fund invests in the stocks of companies that operate across the electric vehicles, battery technologies and autonomous driving technology sectors. The fund seeks to track the performance of the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index.
GOOGL has a 4.53% weighting in the fund as its top holding, followed by Toyota Motor Corp. (TM) at 4.20%, and NVDA at 4%. The fund has $380.40 million in AUM. Its 0.47% expense ratio compares well to the 0.50% category average.
IDRV pays $0.30 annually in dividends to its investors, which yields 0.63%. Its average four-year dividend yield stands at 1%. Over the past year, the fund has gained 81.4%. It has gained 40.2% over the past nine months.
It’s no surprise that IDRV has an overall B rating, which equates to Buy in our proprietary rating system. It has an A grade for both Trade and Buy & Hold.
Click here to access IDRV’s Peer grade also. IDRV is ranked #50 of 125 ETFs in the Global Equities ETFs group.
Capital Link NextGen Vehicles & Technology ETF (EKAR)
Managed and launched by Exchange Traded Concepts, LLC, EKAR invests in stocks of companies that operate across the new energy vehicles, autonomously driven vehicles, battery technology, renewable energy, and energy storage sectors. The fund tracks the performance of the ATFI NextGen Transport Technology Index.
EKAR has $10.70 million in AUM. Its top holdings include GOOGL, with a 4.68% weighting in the fund, Daimler AG (DDAIF) at 4.65%, and ABB Ltd. (ABB) with 3.83%. The fund has an 0.95% expense ratio versus the 0.50% category average.
It pays a $0.17 annual dividend, which yields 0.42% at the prevailing share price. Its average four-year dividend yield stands at 1.25%. The fund has gained 90% over the past year and has generated 44.1% returns over the past nine months.
EKAR’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our proprietary rating system. It also has a B grade for Trade and Buy & Hold.
EKAR is ranked #53 in the Technology Equities ETFs group. In addition to this, one can access EKAR’s Peer grade here.
Click here to checkout our Electric Vehicle Industry Report for 2021
DRIV shares were trading at $27.51 per share on Thursday afternoon, up $0.39 (+1.44%). Year-to-date, DRIV has gained 14.77%, versus a 12.68% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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