Market Overview

An Electric Vehicle ETF Revs Up

An Electric Vehicle ETF Revs Up

Investors looking for a way to tap the electric vehicle boom via exchange-traded funds have their fund. The KraneShares Electric Vehicles & Future Mobility ETF (NYSE:KARS) debuted last week.

The KraneShares Electric Vehicles & Future Mobility ETF is something of a departure for New York-based KraneShares, an ETF issuer known primarily for its lineup of China and emerging markets offerings. Popular KraneShares ETFs include the KraneShares CSI China Internet ETF (NASDAQ: KWEB) and the KraneShares Bosera MSCI China A Share ETF (NYSE: KBA).

KARS tracks the Solactive Electric Vehicles and Future Mobility Index. That benchmark “is designed to track the performance of companies engaged in the production of electric vehicles and/or their components, or engaged in other initiatives that may change the future of mobility,” according to KraneShares.

The Future Is Now

While electric vehicle demand is surging, that theme is expected to be durable for years. Coupled with the expected autonomous vehicle boom, KARS could be a way for investors to play the future of the automotive industry right now.

“The shift toward future mobility technologies is occurring rapidly. 54 percent of new car sales and 33 percent of the global car fleet are projected to be electric by 2040,” said KraneShares. “The global electric vehicle market is projected to command $2.7 trillion of total investment before 2040. Autonomous vehicles and the resulting 'passenger economy' are projected to generate a cumulative $8 trillion in global service revenues by 2050.”

As China is the world's largest electric vehicle market, KARS features access to Chinese stocks, including those listed on the mainland, also known as A-shares.

Familiar Names

The top 10 holdings in KARS, which combine for nearly 36 percent of the new ETF's weight, include plenty of familiar automotive and technology stocks. Six of KARS' top 10 holdings are pure play automotive stocks including Tesla Inc. (NASDAQ: TSLA), Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM).

Technology companies in the new ETF's lineup include Nvidia Corporation (NASDAQ: NVDA), Alphabet Inc. (NASDAQ: GOOG) and Texas Instruments Inc. (NASDAQ: TXN).

KARS charges 0.69 percent per year, or $69 on a $10,000 investment.

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