What are the best EV ETF Stocks to buy? For people who want to invest in electric vehicles but don’t necessarily want to choose sides, EV ETFs are the best option.
Without the hassle of purchasing shares in numerous businesses, exchange-traded funds (ETFs) let you invest in a variety of stocks. Additionally, you won’t have to waste time exploring distinct businesses.
Due to the industry’s quick change, this is especially helpful for electric vehicles. While others lose popularity, a constant stream of new firms are joining the market. Shares are frequently bought and sold by several ETF managers. As a result, you won’t have to worry as much about staying current on increasing and decreasing market news.
Some ETFs are highly diverse. For instance, the Russell 3000 Index is tracked by the iShares Russell 3000 ETF (NYSE: IWV). This is very similar to buying stock across the board on the US stock market. Some people are a lot sharper. Some are referred to as thematic funds since they are concentrated on particular markets. This list will discuss the latter as we look at some of the top EV ETFs available right now.
Before we go into the best EV ETFs, let’s know what an EV ETF is.
What is an EV ETF?
It is an exchange-traded fund (ETF) that specializes in firms in the electric vehicle industry. Companies that buy, sell, rent, or produce electric vehicles or their parts are represented by these exchange-traded funds.
With the best electric vehicle ETF, investors may expect excellent returns with little risk, and they can feel good about helping the environment and future.
EV ETFs: Are They a Smart Investment?
Investors can easily obtain exposure to a variety of EV stocks by using EV ETFs. Purchasing shares of an EV ETF can be equivalent to doing so in dozens of separate businesses, in some circumstances. Additionally, investing in electric vehicles now may be a wise move given that the global transition to electric vehicles is already underway.
It’s also important to note that EV ETFs invest in a wider range of companies than only Tesla and Nio. As these businesses are creating autonomous driving technologies, many of them also invest in firms like Apple (Nasdaq: AAPL) and Nvidia (Nasdaq: NVDA). Additionally, you can become more familiar with other EV-related fields, such as charging station operators.
This more comprehensive strategy using EV ETFs is preferable for the typical investor than simply purchasing a large number of Tesla shares. Apple may not be significantly impacted if Tesla faces litigation or otherwise difficulties with its stock price.
While EV ETFs are generally a wise choice, many of them are also actively managed. They, therefore, have higher expense ratios than what investors in index funds are accustomed to paying. It is up to each investor to decide if the extra cost is worthwhile.
Best 5 EV ETF Stocks to Buy
These are the best EV ETFs stocks you should think about including in your portfolio.
1. Global X Autonomous & Electric Vehicles ETF.
This is one of the very best EV ETFs stocks to buy, it was introduced in 2018The DRIV ETF from Global X focuses on autonomous driving technology and has assets worth over $1 billion.
Its major interests are therefore what most people would consider being tech firms, including Alphabet (Nasdaq: GOOG), Microsoft (Nasdaq: MSFT), and Intel (Nasdaq: INTC). Tesla, though, has the greatest holding. It’s also important to note that it has large holdings in General Motors and Toyota (NYSE: TM) (NYSE: GM).
The top 10 holdings of the fund make up a sizable share of all holdings, at close to 30%. DRIV owns 73 holdings in total. DRIV is a wonderful option if you want an EV ETF that also makes investments in manufacturing, self-driving cars, and microchips.
The KraneShares KARS ETF is worth considering if you’re searching for an EV ETF that invests a little bit closer to the wheel. Nearly half of the ETF’s assets, or close to $300 million, are contained in its top 10 holdings. Contemporary Amperex Technology, a Chinese battery producer, is currently its largest holding.
Nio follows closely. Tesla, Aptiv, a manufacturer of car parts (NYSE: APTV), and Analog Devices are some of the other top holdings (Nasdaq: ADI).
Although this ETF invests in microchips and other tech sectors, its primary focus is electric vehicles. However, some people could be concerned about the high expense ratio.
3. SPDR S&P Kensho Smart Mobility ETF.
In reality, the SPDR HAIL ETF is an index fund. This explains why its expense ratio is reduced, though still relatively high. It specifically tries to mimic the S&P Kensho Smart Transportation Index’s performance. This indicates that the fund invests in, according to the State Street Global Advisors website.
As a result, the fund is fully committed to intelligent, autonomous vehicles, including drones.
So, where does this fund put its money in reality? 85 holdings comprise its approximately $100 million in assets. Top among such holdings are Allison Transmission Holdings, Blade Air Mobility, and Avis Budget Group (Nasdaq: CAR) (NYSE: ALSN).
The expense ratio of the iShares IDRV ETF, another index fund, is lower than that of some of the other EV ETFs on this list. It follows the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index in particular. The securities the fund holds wind up including many tech businesses because the fund has a clear aim of investing in self-driving technology.
IDRV, for instance, has assets worth around $500 million that are dispersed among businesses like AMD, Nvidia, and Apple. Tesla is, of course, also featured. However, it is now the fourth-largest holding. This fund is more diverse than some of the others on the list because it has more than 100 holdings.
5. Global X Lithium & Battery Tech ETF.
As suggested by its name, the Global X LIT ETF is an actively managed fund that concentrates on lithium mining operations. One of the earliest EV ETFs is LIT, which has been since 2010. Despite having nearly 40 companies under its administration, this older ETF has the highest net assets under management ($4 billion) of any ETF on this list.
Additionally, the fund has a top-heavy portfolio with its top holding accounting for about 12% of total assets. That distinction belongs to Albemarle Corp. (NYSE: ALB), a manufacturer of materials situated in Charlotte, North Carolina. BYD and Ganfeng Lithium Co Ltd. are two further significant interests.