Solactive launches future cars index, licensed to Evolve Funds for ETF

Sep 29th, 2017 | By | Category: Equities

Solactive has launched the Solactive Future Cars Index Canadian Dollar Hedged which is the underlying reference for a new ETF from Evolve Funds.

Solactive launches thematic future cars index

Tesla features in the index alongside legacy car manufactures Ford, General Motors, Volkswagen and Ferrari.

Listed on the Toronto Stock Exchange, the  Evolve Automobile Innovation Index ETF (TSX: CARS) gives investors thematic exposure to the future of the car industry – autonomous, connected, electric and shared.

Timo Pfiefer, head of research, Solactive, commented: “The automobile industry is transforming at a very rapid pace. The International Motor Show held in September in Frankfurt confirmed this. Electric engines and cars, autonomous driving, and app-driven services like Uber are just a few examples of the revolutionary changes occurring in the automobile industry.

“An ETF created around such an emerging trend can be interesting for investors, as the companies targeted are likely to benefit from these changes.”

The index gives Canadian dollar hedged exposure to companies that are directly or indirectly involved in developing electric drivetrains, autonomous driving or the network connected services of automobiles. The screening procedure selects liquid companies from a starting universe of developed stocks operating in car manufacturing, automobile equipment and electronics and other car-related subsectors.

From this selection universe, the index takes a novel approach to selecting the final components – those companies with the highest R&D to sales ratio are selected for inclusion in the index. Selected components are then equally weighted to form the index.

There are currently 29 index constituents, including recognisable car manufacturers such as Tesla, General Motors, Ferrari, Volkswagen and Ford, as well as electronics firms such as Texas Instruments and Nvida.

Country exposure analysis of the index reveals it is heavily weighted towards the USA, which makes up 57.0% of the index. Other significant country exposures are to the Netherlands (11.1%), the UK (7.3%) and Hong Kong (7.0%).

Looking at the industry breakdown, semiconductors is the largest subsector representation with 55% of the portfolio weight, followed by automobiles (17%), auto components (14%) and electronic equipment (13%).

The performance of the index has been eye-catching this year, having returned 36.6% in the year to 29 September and 44.7% in the previous 12 months.

The ETF has been available to trade since 29 September 2017. It pays dividends monthly and has a management expense ratio of 0.55%.

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