There was a time when many investors in the U.S. thought electric vehicle stocks beyond Tesla Inc TSLA just weren't worth the trouble. That conversation is being dramatically altered this year and China's Nio Ltd. NIO.
Once left for dead and viewed as a speculative, low-priced name, Nio is experiencing an epic renaissance in 2020. On Wednesday, shares of the electric vehicle maker surged 22.57% on volume that was more than triple the daily average after JPMorgan dubbed the name an attractive long-term play on China's booming EV market.
Of course, the rising tide provided Nio stock is of assistance to exchange-traded funds, which were once afterthoughts in relation to this name. Due to the automobile maker's improved financial position, credibility and share price appreciation, it's an increasingly prominent member in some ETFs.
To be precise, 63 ETFs have Nio exposure, according to ETF Research Center (ETFRC) data. Here's a trio that represents the pick of that litter.
KraneShares MSCI China Environment ETF (KGRN)
It helps to be the “Nio ETF” and that's what the KraneShares MSCI China Environment Index ETF KGRN is. This unheralded fund allocates 8.71% of its weight to Nio, making the stock the ETF's largest holding and KGRN the biggest ETF holder of the stock. That's working in the fund's favor this year as KGRN is higher by 84.42%.
KGRN follows the MSCI China IMI Environment 10/40 Index, which is based on five themes: Alternative Energy, Sustainable Water, Green Building, Pollution Prevention and Energy Efficiency. Home to 44 stocks, KGRN also stands as one of the best ways to access Chinese EV makers via the ETF wrapper.
First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)
The First Trust NASDAQ Clean Edge Green Energy Index Fund QCLN is no Nio slouch. The Chinese company is the largest holding in the First Trust fund at 7.82%. That's 165 basis points more than QCLN devotes to Tesla. Those two names account for essentially all of QCLN's automobile exposure.
However, there's much more to the fund as it has 10 industry exposures, including a combined 39% weight to renewable energy and semiconductor stocks. Bottom line: Nio is a contributor, but QCLN's diversity across a hot industry is the primary reason the ETF more than doubled this year.
SPDR S&P Kensho Smart Mobility ETF (HAIL)
The SPDR S&P Kensho Smart Mobility ETF HAIL is also a player in the Nio ETF conversation as the stock is the fund's largest holding at 6.48%. Additionally, HAIL is well-positioned as an alternative to dedicated electric vehicle ETFs as related names, Nio included, combine for almost 21% of the fund's roster.
HAIL is the most diverse of the funds mentioned with exposure to 17 industries. It's up 36% this year.
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