In the automotive space, electric vehicles represent a new growth frontier, a trait that has already been acknowledged by several issuers of exchange traded funds.
On Thursday, iShares, the world's largest ETF sponsor, added to the lineup of U.S.-listed electric vehicle ETFs with the debut of the iShares Self-Driving EV and Tech ETF IDRV.
What Happened
IDRV, which tracks the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index, is the fourth ETF to list in the U.S. that is dedicated to the electric vehicle theme, though several other ETFs have exposure to electric and self-driving vehicles.
IDRV “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,” according to iShares.
Why It's Important
The new ETF's underlying index is constructed “of equity securities of companies listed in one of 43 developed or emerging market countries that derive a certain specified percentage of their revenue from selected autonomous or electric vehicle-related industries, as defined by IDI,” according to the index provider.
IDRV holds 100 stocks, 42.77 percent of which are classified as consumer discretionary names. The technology and industrial sectors combine for almost half the new ETF's weight. IDRV's top 10 holdings include NVIDIA Corp. NVDA, Qualcomm Inc. QCOM, Apple Inc. AAPL and Intel Corp. INTC.
Tesla Inc. TSLA, one of the largest producers of electric vehicles and a player in the autonomous vehicle space, commands a weight of 2.74 percent in IDRV, making the stock the new ETF's 13th-largest equity position.
What's Next
While electric vehicle demand is expected grow rapidly around the world in the coming years, IDRV debuts at a time of tepid electric vehicle adoption in the U.S.
“Last year, only about 2 percent of U.S. auto sales were comprised of full electric or plug-electric hybrid models, with Tesla Inc accounting for more than a third of those sales,” reports Reuters. “The United States ranks seventh in EV sales as a percentage of overall sales, according to the International Energy Agency.”
IDRV costs 0.47 percent per year, or $47 on a $10,000 investment.
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