Krane Funds Advisors has come out with another targeted investment idea, launching an electric car-related ETF to help investors capitalize on improving technologies and the changing face of the transportation industry.
Krane Funds recently added the KraneShares Electric Vehicles and Future Mobility ETF (NYSEArca: KARS), which has a 0.69% expense ratio.
The new ETF may help investors capitalize on future mobility initiatives, notably those in China, with countries around the world rapidly urbanizing populations.
“China is currently the world’s largest electric vehicle market1. Chinese companies like Baidu are developing Artificial Intelligence necessary for Autonomous Driving, and BYD is a world leader in electric vehicles and electric battery manufacturing,” Jonathan Krane, CEO of KraneShares, said in a note. “Global companies within the future mobility ecosystem such as Tesla, Nividia, and Albemarle Corporation are also capitalizing on strong demand from Chinese and global consumers.”
The Electric Vehicles and Future Mobility ETF tries to reflect the performance of the Solactive Electric Vehicles and Future Mobility Index, which include companies that McKinsey & Company has classified as Future Mobility.
Underlying holdings are further broken down into four categories, including Autonomous Driving, Connectivity, Electrification, and Shared Mobility. These companies include those engaged in the electric vehicles production, autonomous driving, shared mobility, lithium and copper production, lithium-ion/lead acid batteries, hydrogen fuel cell manufacturing and electric infrastructure businesses, according to a prospectus sheet.
“These categories have developed into popular global business trends due to the enhanced convenience, cost-effectiveness, improved safety and pollution reduction benefits they can provide. The shift toward future mobility technologies is occurring rapidly. 54% of new car sales and 33% of the global car fleet are projected to be electric by 2040. The global electric vehicle market is projected to command $2.7 trillion of total investment before 2040. Autonomous vehicles and the resulting ‘passenger economy’ are projected to generate a cumulative $8 trillion in global service revenues by 2050,” according to Krane Funds Advisors.
The undelrying index ranks components by market capitalization and then, provided there are at least 30 constituents, weighted so that the largest ten companies are weighted equally, the next ten largest companies are weighted equally, and if there are enough components, the next ten largest companies are weighted equally. So the underlying index follows a type of equally weighted, laddered breakdown.
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