An ETF Focusing on the Next Generation of Automobiles

Innovation Shares has come out with its second exchange traded fund, targeting next generation vehicles and technologies like artificial intelligence that could advance the motor vehicle industry to its next phase.

On Tuesday, Innovation Shares launched the Innovation Shares NextGen Vehicles & Technology ETF (NYSEArca: EKAR), which has a 0.65% expense ratio.

“Like we did with KOIN, we are excited to use our patent-pending AI driven methodology to build a diverse portfolio of equities with exposure to the theme of electric & autonomous vehicles,” Matt Markiewicz, Managing Director with Innovation Shares, told ETF Trends. “As the next generation vehicle mega-theme is in early stages of ramp up, we feel we have identified a complete basket of companies that are well positioned to benefit from more supportive government regulations and accelerating global consumer demand of electric and self-driving vehicles.”

The new Innovation Shares NextGen Vehicles & Technology ETF tries to reflect the performance of the Innovation Labs Next Generation Vehicles Index, which is comprised of companies engaged in the development of “New Energy Vehicles,” such as vehicles propelled by one or more electric motors powered by rechargeable battery packs, or “Autonomously Driven Vehicles,” such as vehicles capable of driving themselves from a starting point to a predetermined destination in “autopilot” mode using various in-vehicle technologies and sensors, according to a prospectus sheet.

The underlying index also employs a type of natural language processing algorithm, which identifies relationships between keywords that are representative of targeted investment trends and themes or strongly tied to Next Generation Vehicles and related technologies.

Companies are categorized as “Battery Producers” or those that mine for metals used in the production of batteries, manufacture of materials and specialty chemicals and components used in batteries, and production of battery cells; “Original Equipment Manufacturers” or companies that design, manufacture and distribute Next Generation Vehicles; “Suppliers” or companies that produce or distribute parts and components used in Next Generation Vehicles; and “Semis and Software” or companies that produce semiconductors used in advanced driver-assistance systems, light detection and ranging and infotainment systems and develop software necessary for sensing, mapping, and providing driving policy within Next Generation Vehicles.