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Investing in the Future of the Automobile

05/28/2019 5:00 am EST

Focus: ETFS

Jim Woods

Editor, Successful Investing and Intelligence Report

This exchange-traded fund uses a proprietary algorithm to identify companies with exposure to electronic vehicles, electric vehicle components and autonomous vehicle technology, explain ETF expert Jim Woods, editor of The Deep Woods.

The Global X Autonomous & Electric Vehicles ETF (DRIV) is a non-diversified, open-ended fund that was launched on April 13, 2018. The ETF has a average market cap of $70 million and currently has $13 million in assets.

Shortly after the fund’s NASDAQ listing, DRIV reached its all-time high of $15.78. Since then, its stock price fell 20%, although it has made solid gains in 2019 and is up 11.35% year to date.

With a 0.68% expense ratio, DRIV is considered a competitive fund in its industry according to ETF.com. The fund also holds a 2.32% dividend yield and recently paid out a $0.325 dividend on Dec. 28. Its next ex-dividend date is June 27.

The fund has 73 holdings with exposure to at least one of three segments: electronic vehicles, including motorcycles/scooters and electric rail; electric vehicle components, including drivetrains, lithium-ion batteries and fuel cells; and autonomous vehicle technology, including sensors, mapping and ride-share platforms.

People who live in or near a large city have, without a doubt, either used or seen a product or service of a company that DRIV includes among its holdings. Those companies not only feature those who engage with electric vehicles but also others who provide popular ride-sharing apps and electric scooters.

DRIV’s top 10 holdings are safe, blue-chip stocks. Their names and their weighting in the fund are: Apple (AAPL), 3.53%; Qualcomm (QCOM), 3.40%; Microsoft (MSFT), 3.38%; Texas Instruments (NTXN), 3.23%; NVIDIA (NVDA) 3.13%; Alphabet (GOOGL) 3.02%; Samsung Electronics Co. Ltd. (SSNLF), 2.92%; General Electric (GE), 2.79%; Intel (INTC), 2.79% and Toyota (TM), 2.60%.

While DRIV offers a chance to invest directly in electric vehicles, since one of its holdings is Tesla, it also provides an even better opportunity to invest in the whole ecosystem of autonomous and electric vehicles, including component and material manufactures.

An analogy for this strategy would be investing in the companies that provided the shovels, axes and other tools that were used during the Gold Rush.

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