Top electric vehicle ETFs to consider in 2022, Money News

PUBLISHED ONMarch 21, 2022 8:10 AMByJoel Koh

We have seen rapidly increasing adoption of Electric Vehicles (EVs) worldwide and EVs emerging as practical transport solutions in recent times. Arguably, this dare I say, the EV revolution has been pushed on by the efforts of Tesla and other automakers.

Not to mention the worsening climate crisis, which has seen governments worldwide trying to reduce our reliance on fossil fuels and has sped up the transition to EVs.

For example, Germany plans to accommodate 10 million EVs by 2030. By 2030, the Chinese Government is targetting that 40 per cent of all vehicles sold in China will be electric.

Closer to home, the Singapore Government aims to phase out Internal Combustion Engine (ICE) vehicles and have all vehicles run on cleaner energy by 2040.

And according to leading market research firm Mordor Intelligence’s Electric Vehicle Market — Growth Trends, Covid-19 Impact And Forecast (2022 to 2027) report:

Mordor reported that the "electric vehicle market was valued at US$370.86 billion (S$504 billion) in 2021, and it is expected to reach $1,298.32 billion by 2027, growing at a compound annual growth rate of 23.35 per cent over the forecast period (2022 to 2027).

"Factors such as the increasing cost of fuel and the government initiatives across different geographies to increase awareness about EVs are expected to promote the usage of electric vehicles over the forecast period. Infrastructure for charging stations continues to expand. Countries like China continue to lead the passenger vehicles and urban buses market due to a well-established supply chain for batteries and Traction Motors.

"The Asia-Pacific region is expected to witness the fastest growth, followed by Europe and North America. The automotive industry in countries such as China, India, Japan, and South Korea is inclined toward innovation, technology, and advanced electric vehicle development.

"The increasing demand for reducing carbon emissions and developing more advanced and fast-charging stations is expected to propel the growth of electric vehicles during the forecast period."

If you are interested in investing in the fast-growing EV sector, this list of Exchange Traded Fund (ETFs) might interest you.

Here’s all you need to know!

TL;DR: Top EV ETFs 2022

ETF	Total expense ratio (p.a.)	Returns since inception (average annualised)	Fund's net assets
Global X Autonomous & Electric Vehicles	0.68 per cent	18.29 per cent (March 4, 2018)	$1.19 billion
iShares Self-driving EV & Tech	0.47 per cent	25.94 per cent (April 16, 2019)	$516 million
KraneShares Electric Vehicles and Future Mobility	0.18 per cent	15.57 per cent (Jan 18, 2018)	$272.4 million
Global X Lithium & Battery Tech ETF	0.75 per cent	9.77 per cent (July 22, 2010)	$4.58 billion
Nikko AM MSCI China EVs & Future Mobility	0.70 per cent	33.0 per cent* (May 31, 2018)	$30.15 million

Important terms to know

Before we begin, there are some essential terms you need to know.

Beta

According to Global X, "Beta measures the volatility of a fund’s price relative to the volatility in the market index and can also be defined as the percentage change in the price of the fund given a one per cent change in the market index. A beta below one suggests that the fund was less volatile than the market benchmark."

Standard deviation

The standard deviation of a stock’s returns represents the Chinese concept of 'risk' well. Standard deviation measures the deviation of a stock’s returns from its expected returns.

In this case, if a stock performs well in the market above its expected or historical mean, the standard deviation of the stock increases.

Hence, investors have a greater opportunity to benefit from the above-expected results.

Of course, 'danger' also lies in the sense that the stock’s performance can be much worse than what is expected.

1. Global X autonomous and electric vehicles ETF

First up, we have the Global X autonomous and electric vehicles ETF. This passively managed ETF tracks the Solactive autonomous and electric vehicles index with trades on the Nasdaq under the ticker symbol DRIV.

Here is the key information about this ETF (via Global X):

Inception date: March 4, 2018
Underlying index: Solactive autonomous and electric vehicles index
Management: Passively managed
Number of holdings: 75
Assets under management: $1,503.7 million
Total expense ratio: 0.68 per cent per annum (For every $10,000 invested, you will pay $68 in fees every year.)
Dividend distribution fequency: Semi-annual.
ETF’s prices as of March 13, 2022: $24.81.

This ETF is a thematic ETF that invests in companies that build and sell EVs, produce critical EV materials like lithium and cobalt, and produce components like lithium batteries

Not to mention the companies that develop autonomous vehicle software and hardware.

As such, this ETF grants you more direct exposure to the EV sector.

DRIV ETF holdings

This ETF’s top ten holdings include:

DRIV ETF sectors

In terms of diversification, the ETF grants investors global exposure across multiple sectors and industries:

DRIV ETF performance

In terms of historical performance, the ETF has done quite decently:

The ETF has a total return of 65.4 per cent since inception (March 4, 2018) but has fallen 20.51 per cent YTD due to soaring inflation and other geopolitical events like the US Federal Reserve’s plan to increase interest rates and Putin’s Russia invading Ukraine.

Additional thoughts

This ETF is a rather solid pick as it is well diversified across sectors and industries. The top ten holdings of this ETF are also quite well balanced out, with no one company dominating the ETF excessively.

However, the ETF is still quite US-centric as nearly two-thirds of the ETFs companies are based in the US The ETF is also quite thinly traded as it has a 30-day median bid-ask spread of 0.11 per cent and a relatively high expense ratio of 0.68 per cent.

2. iShares self-driving EV and tech ETF

Next up, we have the iShares Self-Driving EV and Tech ETF.

According to iShare, “the iShares Self-Driving EV and Tech ETF seeks to track the investment results of an index composed of developed and emerging market companies that may benefit from growth and innovation in and around electric vehicles, battery technologies and autonomous driving technologies.”

Here is the key information about this ETF:

Inception date: April 16, 2019
Underlying index: NYSE FactSet global autonomous driving and EV index
Management: Passively managed
Number of holdings: 121
Assets under management: $516 million
Total expense ratio: 0.47 per cent per annum (For every $10,000 invested, you will pay $47 in fees every year.)
Dividend distribution frequency: Semi-annual
30-day median bid/ask spread: 0.15 per cent
ETF’s price as of March 13, 2022: $41.91.

With this ETF, you will be investing in companies at the cutting edge of self-driving and electric vehicle (EV) innovation.

The ETF will also grant you exposure to global companies along the entire value chain of self-driving and EV industries across sectors and geographies.

IDRV ETF holdings

This ETF’s top ten holdings include:

The IDRV ETF’s top five holdings are similar to DRIV with Apple, Toyota Motor Corp, Qualcomm, Intel and Alphabet. However, IDRV is more concentrated, allocating higher weightage to the top ten holdings.

IDRV ETF sectors

In terms of diversification, the ETF grants investors global exposure across multiple sectors and industries:

IDRV ETF performance

Also, here is the annualised performance of the ETF:

However, the ETF is up 61.69 per cent since its inception (April 16, 2019) but has fallen 24.38 per cent YTD due to soaring inflation and other geopolitical events like the US Federal Reserve’s plan to increase interest rates and Putin’s Russia invading Ukraine.

Additional thoughts

All things considered, DRIV and IDRIV are somewhat similar.

But, one of the main differences between the ETFs is the expense ratio, as IDRV’s expense ratio is 0.47 per cent compared to DRIV’s 0.68 per cent.

3. KraneShares EVs and future mobility ETF

Alternatively, you might want to consider the KraneShares Electric Vehicles and Future Mobility ETF.

Here is the key information about the ETF:

Inception date: Jan 18, 2018
Underlying index: Bloomberg EV index
Management: Passively managed
Number of holdings: 77
Assets under management: $272.42 million
Total expense ratio: 0.70 per cent per annum (For every $10,000 invested, you will pay $70 in fees every year.)
Dividend distribution frequency: Annual
ETF’s price as of March 13, 2022: $35.43.

According to KraneShares, "KARS is benchmarked to the Bloomberg EV index, which provides exposure to companies engaged in producing electric vehicles and/or their components. The index includes issuers engaged in the electric vehicle production, autonomous driving, shared mobility, lithium and/or copper production, lithium-ion/lead-acid batteries, hydrogen fuel cell manufacturing, and electric infrastructure businesses."

In other words, the ETF attempts to track the entire EV industry from lithium mining to battery and vehicle production.

Investing in this ETF grants you exposure to:

Global companies that operate in all areas of new transportation methods, passenger and freight, including electric vehicles, autonomous vehicles and shared mobility
Exposure to companies that lead the development of vehicle connectivity like the Internet of Vehicles (IoV) and Intelligent mobility
Exposure to the potential growth brought on by increased demand for lithium-ion batteries and non-ferrous metals like lithium due to electric vehicle adoption
Access to equities listed in mainland China, which is currently the world’s largest electric vehicle market.

KARS ETF holdings

These are the ETFs top ten holdings:

The ETF’s top holdings include Contemporary Amperex Technology which primarily produces lithium-ion batteries. They’re also quite a few legacy automakers like Ford, General Motors and Mercedes Benz.

KARS ETF sectors

KARS ETF performance

Also, here is information about the ETF’s performance:

The ETF has a total return of 40.48 per cent since inception (18 Jan 18, 2018) but has fallen 25.88 per cent YTD due to soaring inflation and other geopolitical events like the US Federal Reserve’s plan to increase interest rates and Putin’s Russia invading Ukraine.

Additional thoughts

All things considered, KARS is the ETF to consider if you want more exposure to China’s EV sector.

4. Global X lithium and battery tech ETF

Next up, we have the Global X lithium and battery tech ETF.

This ETF is not a direct play on the whole EV sector. Instead, it grants investors exposure to the complete lithium cycle from mining and refining the metal through battery production.

This commodity is absolutely vital to the EV industry as almost all EVs use lithium to make their batteries.

Not to mention that the ETF tracks the performance, before fees and expenses, of the Solactive global lithium index.

Here is the key information about the ETF:

Inception date: July 22, 2010
Underlying index: Solactive global lithium index.
Management: Passively managed
Number of oldings: 41
Assets under management: $4.58 billion
Total expense ratio: 0.75 per cent per annum (For every $10,000 invested, you will pay $75 in fees every year.)
Dividend distribution frequency: Semi-annual
ETF’s price as of March 13, 2022: $68.89.

LIT ETF holdings

Here are the ETF’s top ten holdings:

LIT ETF sectors

In terms of diversification, LIT is more concentrated as the Materials Sector makes up close to half of the ETF.

The ETF is also quite China-centric as well.

LIT ETF performance

Here’s more on the ETF’s performance. There is more data as this ETF was incepted in 2010.

The ETF has a total return of 114.08 per cent since inception (July 22, 2010) but has fallen 19.83 per cent YTD due to soaring inflation and other geopolitical events like the US Federal Reserve’s plan to increase interest rates and Putin’s Russia invading Ukraine.

Additional note

Note that this ETF will be more volatile as it will be affected by the cyclical pricing of commodities.

5. Nikko AM MSCI China EVs and future mobility ETF

Last but not least, we have the Nikko AM MSCI China EVs & Future Mobility ETF.

Here is the key information about the ETF:

Inception date: Jan 20, 2022
Underlying index: MSCI China all shares IMI future mobility top 50 index
Management: Passively managed
Number of holdings: 50
Assets under management: $30.15 million
Total expense ratio: 0.70 per cent per annum (For every $10,000 invested, you will pay $70 in fees every year.)
Dividend distribution frequency: Not applicable
ETF’s Price as of March 13, 2022: $0.81.

The MSCI China EVs and future mobility ETF allows investors to participate in China’s growing EV sector.

The ETF’s investment objective is to replicate the performance of the MSCI China all shares IMI future mobility top 50 index.

Some of the companies part of the index include Contemporary Amperex Technology Co Limited, NIO, and Xpeng.

The ETF will be an excluded investment product.

Local investors can also use their supplementary retirement scheme to invest in the ETF instead of the default cash option.

EVS ETF holdings

In addition, there is more information about what companies make up the index:

As you can see, the index is heavily weighted towards Chinese companies involved in the EV sector.

The biggest constituent is actually Contemporary Amperex Technology Co Limited.

For the uninitiated, the 2011 founded Chinese battery manufacturer and technology company primarily manufactures lithium-ion batteries for EVs.

The company also produces battery management systems as well as energy storage systems.

EVS ETF sector

In terms of diversification, the ETF grants investors diversified exposure across multiple sectors and industries but limited global exposure:

EVS ETF Performance

Next, up let’s take a look under the hood of the MSCI China all shares IMI future mobility top 50 index, which the ETF tracks.

The MSCI China all shares IMI future mobility top 50 index can be considered a distillation of the MSCI China all shares IMI index — a total market index that captures large, mid and small-cap representation across China A-shares, B‐shares, H‐shares, Red‐chips, and P‐chips.

The ETF has an annualised return of 33.02 per cent since inception (May 31, 2018) but has fallen 10.55 per cent YTD due to soaring inflation and other geopolitical events like the US Federal Reserve’s plan to increase interest rates and Putin’s Russia invading Ukraine.

Disclaimer: All content is displayed for general information purposes only and does not constitute professional financial advice.

This article was first published in Seedly.

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