The recent pullback in shares of electric vehicle giant Tesla (NASDAQ: TSLA) notwithstanding, the ARK Innovation ETF (NYSEArca: ARKK) is one of the best stories among actively managed ETFs this year and EV sales are a big reason why.
Fortunately, that trend is still in its early innings. Boding well for ARKK and its EV exposure is that data confirm electric vehicles are taking market share from their internal combustion counterparts because sales of the former are soaring while sales of the latter are slumping.
“Then there’s the electric vehicle market—or rather, the three major EV markets: China, Europe, and North America. Combined, they’re still only 4.8% of total vehicle sales. But after such a steep drop, their relative performance stands out in the global market,” reports Nathaniel Bullard for Bloomberg.
ARKK’s Just Getting Going
ARKK, now the largest equity-based actively managed ETF, is known for having one of the largest weights to Tesla among all ETFs, but there’s more to the story.
“Companies within ARKK include those that rely on or benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the areas of DNA technologies (‘’Genomic Revolution’), industrial innovation in energy, automation, and manufacturing (‘Industrial Innovation’), the increased use of shared technology, infrastructure and services (‘’Next Generation Internet’), and technologies that make financial services more efficient (‘Fintech Innovation’),” according to ARK Invest.
Making ARKK all the more meaningful as a long-term EV idea is that sales of electric vehicles fell by less than their traditional rivals in the first half of 2020.
“While EV sales also dropped overall in the first and second quarters, they dropped less—just 15%—which qualifies as outperforming,” according to Bloomberg.
Furthermore, due to the increased concerns over environmental issues, global governments are supporting the development of electric vehicles worldwide. Consequently, the high voltage battery market will continue to enjoy increased interest and investments as electric vehicles is expected to drive the growth.
“While the details are complicated, the overall auto sales message is clear: EVs are going to be driving global growth in the years to come,” according to Bloomberg.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.