Harry Domash, Online Investing | Electric vehicles could give jolt to these ETFs - Santa Cruz Sentinel
Next year, we’ll see all-electric vehicles (EVs) introduced by established brands such as Audi, BMW, Cadillac, Ford, Hyundai, Jaguar, Kia, Mercedes-Benz, Porsche, Volvo and Subaru, as well as from new brands including Bollinger Motors, Canoo Lifestyle, Fisker and Lucid Group.
One major advantage of EVs compared with conventional cars and trucks is that they produce little, if any, greenhouse gas emissions. Thus, broad adoption could result in improved air quality.
While nobody can predict how well the market will accept this onslaught of new cars and trucks, it’s obvious that change on the way. How can stock investors profit from this change.
Given all of the unknowns, I think that investing via exchange traded funds makes more sense that betting on individual stocks. With that in mind, here are four exchange traded funds, each representing different market segments, that look good to me. If you do want to buy individual stocks instead of exchange traded funds, I suggest that you focus on the biggest holdings for each exchange traded fund that I’ll include in the descriptions.
Simplify Volt Robocar Disruption and Tech (ticker: VCAR): This fund holds 25 or so stocks that it expects to dominate the autonomous driving segment of the electric vehicle industry. The fund, managed by Volt Equity, expects Tesla to remain the dominant player in the “robocar” race and Tesla accounts for more than 20% of the portfolio. Next biggest holdings are Nvidia (NVDA), Vale (VALE), Taiwan Semiconductor (TSM) and KUKA A.G. (KUKAY), which is a robotics parts supplier based in Augsburg, Germany. A December 2020 IPO, the Simplify fund has returned 19% for the past 12 months.
Smart Transportation amp; Technology (MOTO): focuses on firms that will be involved in the production of electric vehicles that will be primarily be used to offer transportation services such as Uber. Nvidia (NVDA), Tesla (TSLA), and ON Semiconductor (ON), each account for about 5% of the total portfolio. Rounding out the top five are Alphabet (GOOG) and Infineon Technologies (IFX). A November 2019 IPO, the fund has returned 22% for the past 12 months.
Lithium battery production
Global X Lithium amp; Battery Tech (LIT): Currently, all electric vehicles require lithium batteries. This fund holds stocks involved in all aspects of lithium battery production from mining to refining to battery production. About 45% of the funds holdings are based in China and only 22% are based in the U.S. Top holdings available to U.S.-based investors include Albemarle (ALB), Tesla (TSLA), Sociedad Química y Minera de Chile (SQM), Mineral Resources Australia (MALRF), and Livent (LTHM). Trading since July 2010, the fund has returned 58% for the past 12 months and averaged 46% annually for the past three years.
KraneShares Electric Vehicles amp; Future Mobility (KARS): Hold companies involved in manufacturing electric vehicles or components used in EV production. Biggest holdings available to U.S.-based investors include Ford Motor (F), Tesla (TSLA), Analog Devices (ADI), Infineon Technologies (IFX) and General Motors (GM). A January 2018 IPO, the fund has returned 37% for the past 12 months and averaged 40% annually for the past three years.
Those are my ideas. While the future for the EV industry looks bright, expect plenty of bumps along the way. So don’t use cash to buy these ETFs that you’re going to need back anytime soon.
Harry Domash of Aptos publishes the Winning Investing and the Dividend Detective websites. Contact him at www.winninginvesting.com or Santa Cruz Sentinel, 324 Encinal St., Santa Cruz, CA 95060. To see previous Domash columns, visit santacruzsentinel.com/topic/Harry_Domash.