With the induction of electric automaker Tesla into the S&P 500, heavy volume is expected this week. Tesla is one of the top holdings of the Global X Autonomous & Electric Vehicles ETF (DRIV), so it’s one fund to watch if its over 50% gain year-to-date isn’t enough reason already.

The fund seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles (“EVs”), and EV components and materials. This includes companies involved in the development of autonomous vehicle software and hardware, as well as companies that produce EVs, EV components such as lithium batteries, and critical EV materials such as lithium and cobalt.

DRIV seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Autonomous & Electric Vehicles Index. DRIV’s expense ratio comes in at 0.68%. The fund offers:

  • High Growth Potential: DRIV enables investors to access high growth potential through companies critical to the development of autonomous and electric vehicles – a potentially transformative economic innovation.
  • An Unconstrained Approach: DRIV’s composition transcends classic sector, industry, and geographic classifications by tracking an emerging technological theme.
  • ETF Efficiency: In a single trade, DRIV delivers access to dozens of companies with high exposure to the autonomous and electric vehicles theme. Having the disruptive automotive industry in an ETF wrapper also gives traders access to short-term market maneuvers in this sub-sector.

DRIV Chart

Tesla Being Inducted to the S&P 500 This Friday

DRIV has about 4% of its fund allocated towards Tesla. The automaker’s stock is already up almost 800% this year and it is garnering a ton of attention from analysts on whether it can prove its lofty valuations.

Per a CNBC report, the “addition of Tesla into the S&P 500 at the close this Friday will be one of the biggest trading days in history, but it is only the most recent example of an ongoing trend: index managers who make the decisions of what goes in and out of these indexes are becoming increasingly influential.”

“Rebalancings have become major trading events because more investors are tied to indexes, so the volume of trading during rebalances has gone way up,” said Harry Whitton from market maker Old Mission.

Per the article, “Whitton noted that the heaviest days of trading are now typically on major index rebalancings. The S&P 500 will rebalance on Friday, one of four days a year it does so. Friday’s rebalance will likely see record levels of trading activity at the close due to Tesla’s addition to the S&P 500.”

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