Global X launches Autonomous & Electric Vehicles ETF

Apr 20th, 2018 | By | Category: Equities

Global X has launched the Global X Autonomous & Electric Vehicles ETF (DRIV US), the sixth and latest addition to its thematic technology suite of ETFs, which now houses some $3.9bn in assets.

Global X Robotics & AI ETF passes $450m in assets one year after launch

Jay Jacobs, director of research at Global X.

DRIV tracks the Solactive Autonomous & Electric Vehicles Index which provides exposure to companies involved in the production of electric vehicles (EVs), hybrid vehicles and
the development of self-driving technology.

This includes companies involved in the development of autonomous vehicle (AV) software and hardware, as well as companies that produce EV components such as lithium batteries, and critical EV materials such as lithium and cobalt.

The index is weighted by free-float market capitalization with rebalancing occurring on a semiannual basis.

There are 75 holdings in the index. The largest constituents are Apple, Microsoft, Alphabet, Samsung, and Intel. Investors in the fund will be most heavily exposed to the US at 52.1% of the index, followed by Japan (8.5%) and Germany (8.0%).

“Electric and autonomous vehicles are poised to have one of the most profound impacts on society since the industrial revolution, affecting a wide range of sectors in ways that we’ve only just begun to imagine,” said Jay Jacobs, director of research at Global X.

“In bringing DRIV to market, we’re excited to deliver access to revolutionary shifts in transportation that are at the early stages of their disruptive potential. And we’re equally excited to watch how these technologies will change our daily lives.”

Timo Pfeiffer, head of research at Solactive, added, “The Solactive Autonomous & Electric Vehicles Index touches upon one of the world’s most powerful themes. Imagine a world with lower emissions, optimized traffic, and reduced car crashes. By teaming up with Global X, the Solactive Autonomous & Electric Vehicles Index underpins an ETF designed to capture the ongoing changes in the transportation industry.”

The fund has been listed on the Nasdaq Exchange and has an expense ratio of 68 bps.

The EV theme has become a popular topic for ETF issuers of late with  launches including the KraneShares’ Electric Vehicles and Future Mobility ETF (KARS US), which tracks the Solactive Electric Vehicles and Future Mobility Index, and the Innovation Shares NextGen Vehicles & Technology ETF (EKAR US), which tracks Innovation Labs’ Next Generation Vehicles Index. EKAR is the cheapest of the three with an expense ratio of 0.65%. KARS costs 0.69%.

The rise of autonomous and electric vehicles

While EVs are still at the early stages of adoption, many sector analysts predict a rapid embrace of the technology in upcoming years. In 2017, EV sales represented only 1.7% of all vehicle sales globally; however, the International Energy Agency notes that this figure represents a 51% increase in total sales from the year before.

The adoption of EVs is expected to see bans on new sales of fossil fuel-powered cars by major economies. Norway, for instance, aims to ban the sale of fossil fuel-based vehicles by 2025 and has already made meaningful strides towards this goal – EVs represented 39% of its total sales in 2017. Others, like India, China, and the state of California, have announced similar aspirations.

Solactive notes that the trend towards greater EV adoption will be further supported by factors such as climate regulation, technological advancements, consumer preferences, and falling costs. As such, the transportation industry is expected to undergo significant disruption, creating growth opportunities for companies contributing to these innovations.

While AVs are not yet as common as EVs, the race to full automation (meaning no human input is required in any circumstances) is underway. According to estimates from independent think tank RethinkX, by freeing drivers of the time they currently spend driving, AVs could boost US GDP by $0.5-2.3tn by 2030.

Various car manufacturers believe mass-market AV technology is just a few years away, aiming for fully autonomous cars becoming commercially available between 2019 and 2021.

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