Global X Autonomous & Electric Vehicles ETF: Growth About To Zoom

Summary

• 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.
• I do much more than just articles at The Lead-Lag Report: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

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.

Portfolio

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.

Peer Comparison

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.

Summing Up

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.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This writing is for informational purposes only and Lead-Lag Publishing, LLC undertakes no obligation to update this article even if the opinions expressed change. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. It also does not offer to provide advisory or other services in any jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Lead-Lag Publishing, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

Comments

[Kenny_Bunkport]

Most investable theme for the next decade

[raising rusty]

been brutal week for DRIV & BATT.

[therealandrewm]

Thanks for the analysis, great write-up. As these are growth stocks, how does long term interest rates running up to, say, 2%, affect the NPV of its future cash flows?

[ReadyToRetireNOW]

Looks like a good diversified way to play this theme.