- The Global X Autonomous & Electric Vehicles ETF offers investors exposure to the entire EV sector, which is about to witness boom times.
- The ETF has appreciated about 92% in the last year and is currently hovering around $26 (as of March 4, 2021), at a time when the market is passing through a period of correction because of rising bond yields.
- Given President Joe Biden’s EV-friendly policies and the ETF’s focus on investing mostly in domestic stocks, I am bullish on its growth prospects.
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President Joe Biden had promised in his campaign speeches that his administration would restore the full tax credit for EV purchases and explore passing on direct consumer rebates to motivate car buyers to exchange their gasoline-powered cars for EVs and zero-emission cars. The President has also started to replace all 645,000 federal vehicles with US-made EVs.
EV stocks outperformed tech stocks in 2020, and judging by the news and events surrounding the sector, I reckon that EV and component makers are in for a rollicking time going forward.
Image Source: My Tweet/The Lead-Lag report
Therefore, the perception is that the Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV) will do exceedingly well in the future. The ETF has appreciated about 92% in the last year and is currently hovering around $26 (as of March 4, 2021), at a time when the market is passing through a period of correction because of rising bond yields.
Here is my analysis on whether DRIV is still investable at these prices.
The ETF invests in companies that manufacture EVs and their components, batteries, hardware, software, raw materials like lithium and cobalt, etc. Its current portfolio turnover ratio is low at 13.76%, which implies that it holds on to most of its stocks for the medium to long term. However, the fund’s portfolio turnover ratio was 31.26% at the time of filing its prospectus.
So, the first takeaway is that if investors are bullish about EV prospects in the long run, they should not worry about short-term corrections in DRIV’s price because current data suggest that the fund invests for the medium to long term.
Image Source: DRIV’s Website
As of March 3, 2021, about 28% of DRIV’s total assets were invested in 10 holdings, which included tech giants like Alphabet (GOOG) (GOOGL), Intel (INTC), Apple (AAPL), and Microsoft (MSFT). The ETF held 75 stocks as of the same date. About 34% of its assets were invested in tech stocks while 33% were parked in the consumer discretionary space (read as EV makers). About 62% of its total assets were invested in domestic stocks, 8% in Japanese stocks, and 30% in other global stocks.
DRIV’s Other Internals
DRIV is a member of Mirae Asset Global Investments, a reputed fund management firm. Its expense ratio is low at 0.68%, which is a positive factor because when growth stocks move, they move very rapidly and in double-digit percentages.
About dividends, DRIV has been paying them since its inception in 2018. Of course, the dividend payout is negligible – but you cannot expect to earn income from a growth ETF, especially one that is still in its infancy.
Image Source: DRIV’s Dividend History
For the record: DRIV paid $0.25 as dividend in 2020 and I reckon it will pay at least the same sum in 2021, which earns it a forward dividend yield of about 1% based on its current market price.
The ETF’s NAV was $26.66 as of March 3, 2021, and its market price was $25.64 as of March 4, 2021.
DRIV’s goals are to generate a price and yield that corresponds to the Solactive Autonomous & Electric Vehicles Index.
Image Source: The Solactive Website
The benchmark index appreciated 89% (from 925 to 1750) in the last year, while DRIV gained 92% in the same period. So, DRIV is performing better than its benchmark, which is another positive.
Image Source: DRIV’s Peer Comparison Chart
I benchmarked the 1-year price momentum of DRIV and discovered that it has outperformed its peers like KraneShares Electric Vehicles and Future Mobility Index ETF (KARS), Ideanomics NextGen Vehicles & Technology ETF (EKAR), Amplify Lithium & Battery Technology ETF (BATT), and iShares Self-driving EV and Tech ETF (IDRV) from the price momentum point of view.
However, it underperformed the Global X Lithium & Battery Tech ETF (LIT).
LIT is a pure lithium play while DRIV is an inclusive EV play, and therefore investors who are bullish on the entire EV space may find DRIV a better option than LIT. Those with a fetish for lithium stocks can opt for LIT.
Market indications and government announcements point to the fact that the EV sector will witness boom times by 2025-26, and that the sector is all set to enter an exciting growth phase soon.
I am bullish on the sector and also on DRIV as a growth ETF.
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