Hello! This week’s ETF wrap shines a light on electric cars, an industry that BlackRock’s Jay Jacobs says has taken off but still has a ways to go — the kind of “inflection point” the firm looks for in thematic investment opportunities.
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Electric vehicles and semiconductors are hot areas for exchange-traded funds based on returns so far this year, as technology-related stocks rise in 2023.
EVs, which have been a windfall for the semiconductor industry, represent one of the best investment themes among BlackRock’s thematic ETFs, according to Jay Jacobs, the company’s US head of thematic and active equity ETFs. BlackRock’s iShares Self-Driving EV & Tech ETF is traded on several exchanges
IDRV
has climbed 10.3% so far this year through Wednesday, compared with a gain of 8.6% for the SPDR S&P 500 ETF Trust
SPY,
according to FactSet data.
“Innovation can happen slowly and then all at once,” said Jacobs, in a telephone interview. “In the last five years or so, we’ve just seen an incredible acceleration of electric vehicle adoption.”
While the EV industry has taken off, it still has a long way to go, considering electric vehicles represent only 7% of total car sales in the US — even after rapid sales growth over the past year, according to Jacobs.
“When we look at thematic investment opportunities, that’s exactly the inflection point we’re looking for,” he said, referring to the moment when an innovative idea turns into something adopted by the mass market. “That’s where the majority of the economic opportunity will materialize.”
Meanwhile, technology-related stocks are on the rise in 2023. The Technology Select Sector SPDR Fund
XLK,
which tracks an index of S&P 500 tech stocks, is up 24.1% this year through Wednesday, according to FactSet data.
The three largest electric vehicle ETFs based on assets under management are the Global X Autonomous & Electric Vehicles ETF
DRIV,
iShares Self-Driving EV & Tech ETF and KraneShares Electric Vehicles & Future Mobility Index ETF
KARS,
according to Aniket Ullal, head of ETF data and analytics at CFRA Research.
The Global X Autonomous & Electric Vehicles ETF has gained 16.7% this year through Wednesday, while the KraneShares Electric Vehicles & Future Mobility Index ETF is up a little more than 5% during the same period, FactSet data show.
The Global X Autonomous & Electric Vehicles ETF has “fairly large exposure to technology companies,” Ullal said, pointing to its holdings of Google parent Alphabet Inc.
GOOGLE
and Apple Inc.
AAPL
as examples. The ETF’s top five on May 17 included Nvidia Corp.
NVDA,
Tesla Inc.
TSLA,
Alphabet, Apple and Toyota Motor Corp.
JP: 7203,
according to Global X’s website.
The largest holdings of the KraneShares Electric Vehicles & Future Mobility Index ETF were Panasonic Holdings Corp.
JP: 6752,
Nidec Corp.
JP: 6594,
Modern Amperex Technology
CN: 300750,
BYD Co.
CN: 002594
and Samsung
KR: 006400
of May 17, data on KraneShares website showed.
As for the iShares Self-Driving EV & Tech ETF, the fund’s top five weightings as of May 17 were Li Auto Inc.
Hong Kong: 2015,
BYD
HK: 1211,
ABB
CH: ABBN,
Everyone and Volkswagen
XE: VOW3,
according to the fund’s holdings data on BlackRock’s website.
BlackRock’s fund aims for a “pure play” strategy regarding electric and autonomous vehicles, Jacobs said. Meanwhile, he said, the iShares Semiconductor ETF
SOXX
should continue to benefit from a wind from the proliferation of electric vehicles, as well as from the growth in artificial intelligence in 2023.
The iShares Semiconductor ETF has skyrocketed 24% this year through Wednesday, according to FactSet data.
Semiconductor ETFs have seen “good flows” this year, attracting about $1.9 billion in capital from investors through May 15, according to Ullal. By contrast, the “future mobility” category of ETFs, which includes electric vehicle funds, saw total outflows of $97 million during the same period, he said.
As usual, here’s your look at the top- and bottom-performing ETFs over the past week through Wednesday, according to FactSet data.
The good…
| Top performers | %Performance |
| The cost of shares SPDR S&P Regional Banking ETF CRE |
9.8 |
| United States Natural Gas Fund LP UNG |
8.0 |
| iShares US Regional Banks ETF IAT |
7.8 |
| The cost of shares SPDR S&P Bank ETF KBE |
7.5 |
| SPDR S&P Semiconductor ETF’s share price XSD |
6.4 |
| Source: FactSet data up to and including Wednesday 17 May Start date 11 May. Excluding ETNs and leveraged products. Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or more. |
… and the bad
| Bottom Performers | %Performance |
| The cost of shares PIMCO 25+ Year Zero Coupon US Treasury Index ETF ZROZ |
-3.3 |
| Utilities Select Sector SPDR Fund XLU |
-3.3 |
| Vanguard Utilities ETF VPU |
-3.1 |
| Vanguard Extended Duration Treasury ETF is traded on several trading websites EDV |
-3.1 |
| iShares US Utilities ETF IDU |
-3.0 |
| Source: FactSet data |
New ETFs
- Roundhill Investments said Thursday it launched the Roundhill Generative AI & Technology ETF
CHAT,
a fund that provides exposure to “companies at the forefront of artificial intelligence technology, with a focus on generative AI.”
- Putnam Investments announced on Thursday the launch of the Putnam Emerging Markets ex-China ETF
PEMX,
an actively managed fund that focuses on emerging market companies excluding investments in China and Hong Kong.
- BNY Mellon Investment Management announced on May 17 the launch of BNY Mellon Women’s Opportunities ETF
BKWO
and BNY Mellon Innovators ETF
BKIV.
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