ETFs for the Driverless Car Revolution

Investors seeking exposure to the driverless car revolution now have the option of buying into exchange-traded funds (ETFs) specifically dedicated to driverless cars, electric vehicles, and other innovations in the automobile industry.

Among this class of ETFs are KraneShares Electric Vehicles and Future Mobility ETF (KARS), which debuted in January of 2018; Capital Link Global Green Energy Transport and Technology Leaders ETF (EKAR); which debuted in February 2018, and Global X Autonomous & Electric Vehicles ETF (DRIV), which debuted in April 2018. Prior to the introduction of these specific ETFs, there were no ETFs directly related to self-driving cars and electric vehicles, and only one ETF was focused on the automobile industry.

KraneShares Electric Vehicles and Future Mobility ETF (KARS)

The KraneShares Electric Vehicles and Future Mobility ETF (KARS) had $263 million in net assets and a 0.70% expense ratio, as of Aug. 5, 2022. The fund tracks the performance of Bloomberg Electric Vehicles Index, which invests in global companies not only involved with electric vehicle production and/or components. but also "autonomous driving, shared mobility, lithium and/or copper production, lithium-ion/lead acid batteries, hydrogen fuel cell manufacturing, and electric infrastructure businesses."

Capital Link Global Green Energy Transport and Technology Leaders ETF (EKAR)

The Capital Link Global Green Energy Transport and Technology Leaders ETF (EKAR) is made up of global stocks related to electric autonomous, or self-driving, vehicles as well as renewable energy/battery storage. The fund invests in companies that fall into five categories within the sector: battery producers, original equipment manufacturers, suppliers, semiconductors and software producers and renewable energy producers. The ETF held a relatively small $7.82 million in net assets with an expense ratio of 0.65% as of Aug. 5, 2022. The fund follows the AF Global Green Energy Transport and Technology Leaders Index.

Global X Autonomous & Electric Vehicles ETF (DRIV)

The Global X Autonomous & Electric Vehicles ETF (DRIV) seeks to correspond to the Solactive Autonomous and Electric Vehicles Index. The fund invests in companies that are involved in the development and manufacturing of software and hardware for driverless vehicles, and companies that produce electric vehicles and their components, such as lithium and cobalt. As of Aug. 5, 2022, the fund had $1.01 billion in net assets and a 0.68% expense ratio.

Related Exchange Traded Fund Options

People looking to invest in driverless cars also have the option of adding ETFs to their portfolio that are focused on the automobile industry and related technological innovations.

• First Trust's S-Network Future Vehicles & Technology fund (CARZ) was launched in 2011, and until 2018, it was the only ETF related to the automobile industry. As of Aug. 5, 2022, the fund had $56 million in net assets with an expense ratio of 0.70%. The ETF tracks the S-Network Electric & Future Vehicle Ecosystem Index, which invests in companies worldwide involved in electric and autonomous vehicle manufacturing, enabling technologies, enabling materials. Holdings include Tesla (TSLA), NVIDIA Corp (NVDA), Apple Inc (AAPL), Qualcomm Inc. (QCOM), and Microsoft Corp (MFST).
• Another more broad investment option related to driverless cars is the Autonomous Technology & Robotics ETF by ARK Invest (ARKQ). The fund launched in 2014 and reached $1.1 billion in net assets as of June 30, 2022. ARKQ has a 0.75% expense ratio. This is an actively managed fund that invests in companies that are not only involved in autonomous technology, but also robotics, 3D printing, and energy storage. Together, they account for almost 88% of the portfolio's assets. The top three sectors, industries, information technologies, and consumer discretionary, combined make up about 91% of the sector breakdown.
• ETF investors may also wish to consider a fund like the First Trust Clean Edge Green Energy Index Fund (QCLN). Launched by First Trust in 2007, the ETF focuses on companies involved in providing clean alternative energy, like solar photovoltaics, wind power, advanced batteries, fuel cells. Now, the fund includes electric cars. There is some significant overlap between companies involved in developing driverless cars and those involved in clean energy. This fund, which tracks the NASDAQ Clean Edge Green Energy Index composed of U.S.-listed firms engaged in developing clean energy, had $2 billion in net assets as of Aug. 5, 2022, and a 0.58% expense ratio. Automobiles and semiconductor firms, which are essential in creating driverless car technology, account for about a third of the portfolio holdings.