Electric vehicles stocks are all the rage now that these green vehicles are becoming affordable, easier to charge while on the road, and highly efficient. Gas-powered vehicles may be completely off the roads within a couple of decades.
The question is how investors can best profit from the transition to electric vehicles. There is no sense investing thousands or tens of thousands of dollars in one or two electric vehicle stocks and hoping they pan out across the long haul. Instead, the better approach is to invest your money in a couple of electric vehicle ETFs for optimal diversification.
Let’s take a look at three electric vehicle ETFs to buy as we head into the new year and possibly a Democrat administration that favors green policies that bode well for EV stocks: KraneShares Electric Vehicles and Future Mobility Index ETF (KARS), SPDR S&P Kensho Smart Mobility ETF (HAIL) and iShares Self-Driving EV & Tech ETF (IDRV).
KraneShares Electric Vehicles and Future Mobility Index ETF (KARS)
Wouldn’t it be nice to invest your hard-earned money in an ETF that places more than three-quarters of its assets in an electric vehicle index comprised of EV stocks and those of companies that make related EV components? KARS provides that exact opportunity. Though this fund is non-diversified, none of its holdings exceeds 4% weight. KARS' top holdings include Texas Instruments (TXN), Alphabet Inc. (GOOG), Analog Devices (ADI), NVIDIA (NVDA), Advanced Micro Devices (AMD), NIO (NIO), and Tesla (TSLA). KARS has a one-year return of 37.76%. The fund's net assets amount to $33.83 million.
In terms of sector weighting, nearly 40% of KARS is weighted in tech stocks, 36% is weighted in consumer cyclical, 10% is weighted in basic materials and 10% is weighted in industrials. Another 6% is weighted in communication services. If you are concerned about regional exposure, KARS provides decent diversification. About 40% of the ETF's holdings are based in the United States, 25% are in Asia's emerging countries, 15% are in the Eurozone, 9% are in developed portions of Asia, and the rest is split between the United Kingdom, Canada, Japan, Latin America, and Europe Ex Euro.
If you are still on the fence as to whether this ETF is worthy of your money, check out its stellar POWR Ratings: "A" grades in the Peer and Trade components along with "B" grades in the Industry and Buy & Hold components. KARS is ranked 15th of 110 Global Equities ETFs.
SPDR S&P Kensho Smart Mobility ETF (HAIL)
HAIL is your opportunity to invest in smart transportation in a diversified manner. This ETF dipped down to $17 in March and has since steadily climbed up toward $40. Nearly 10% of HAIL's funds are in NIO. About 5% of the ETF's funds are invested in Plug Power. The rest of HAIL's top holdings include Tesla, Workhorse (WKHS), BorgWarner (BWA), Avis Budget Group, General Motors, and Visteon Corp.
In terms of sector weightings, HAIL is 49% invested in consumer cyclicals, 27% invested in technology, 16% invested in industrials, and 5% invested in communication services. The vast majority of HAIL's holdings are based in the United States. The other 32% of the ETF's holdings are in Asia Emerging (15%), Japan (3.9%), Asia Developed (3%), Europe Emerging (2.7%), Canada (2%), and the United Kingdom (2%).
HAIL hovered between the high $20s and low $30s across the past couple of years only to explode in 2020. The ETF should move even higher if Biden is elected president and the congress go blue, paving the way for EV stocks to ascend to new heights.
iShares Self-Driving EV & Tech ETF (IDRV)
It might not be long until we are surrounded by a mixture of autonomous, self-driving vehicles and others operated by human beings. The shift towards autonomous vehicles is quite a radical transformation, one that can benefit your portfolio in the form of the IDRV ETF. IDRV's top holding is Tesla, followed by the chipmaker NVIDIA, Qualcomm, Apple, and Alphabet. IDRV has a one-year return of 31.91%. The ETF's net assets exceed $53 million.
In terms of sector weightings, IDRV is weighted 38.68% in consumer cyclicals, 38.64% in techn
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ology, 14.79% in industrials, 4.88% in communication services, and 3.01% in basic materials. Nearly 50% of IDRV's holdings are in the United States. Nearly 20% of the ETF's holdings are in the Eurozone. Another 20% is in Japan and Asia Developed.
Look for IDRV to match its previous one-year return of 31% in the year ahead assuming Biden is elected and Congress turns blue, facilitating legislation that benefits the environment as well as autonomous/green vehicle stocks.
KARS shares were trading at $30.88 per share on Tuesday morning, up $0.65 (+2.15%). Year-to-date, KARS has gained 31.07%, versus a 5.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.
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