This year is poised to be a big one for the technology-dependent electric vehicle (EV) market. As the clean energy drive is expected to commence in earnest with Joe Biden’s inauguration as U.S. president, the electric vehicle segment should witness significant momentum. In fact, many states, such as California, have already announced a ban on the sale of new internal combustion vehicles by 2035, supporting the growth of the EV industry. This comes in after nine countries, including the U.K. have announced similar bans.
The investment objective of the Global X Electric Vehicles & Autonomous Vehicles ETF seeks to use algorithms to pick companies that “are involved in the development of electric vehicles and/or autonomous vehicles, including those that make components for those cars and those that provide services for them.
Global X Autonomous & Electric Vehicles ETF (DRIV) has been surging, as evident from its 76% gains over the past year. Since its inception in April 2018, the ETF has closely tracked the benchmark Solactive Autonomous & Electric Vehicles Index. This, coupled with several other factors, has helped DRIV earn a “Strong Buy” rating in our proprietary rating system.
Here is how our proprietary POWR Ratings evaluates DRIV:
Trade Grade: A
DRIV is currently trading above its 50-day and 200-day moving averages of $22.62 and $17.04, respectively, indicating a golden cross uptrend. The ETF has gained 48.9% over the past three months, reflecting solid short-term bullishness.
DRIV has an expense ratio of 0.68%, which is 80 basis points lower than the category average of 0.76%. The ETF’s net fund inflows as of January 12 was $45.85 million, up 673.2% year-to-date. DRIV pays $0.07 as dividends on a semi-annual basis, yielding 0.26% at its current share price.
DRIV’s major holdings, which have driven its performance in the short term, are Tesla Inc. (TSLA), Plug Power Inc. (PLUG), Apple, Inc. (AAPL) and NIO Limited (NIO). The ETF’s has a 4.85% weighting in TSLA, while PLUG and NIO account for 3.98% and 2.92% weightings, respectively. It also has significant exposure to the tech industry, which accounts for 43.6% of its portfolio.
Buy & Hold Grade: A
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers, DRIV is well-positioned. It is currently trading just 0.6% below its 52-week high of $27.23, which it hit yesterday.
DRIV has gained 76% over the past year, which can be attributed to the ETF’s investment strategy . It has a strong position in the EV industry, which has been surging since 2020 amid rising concerns regarding climate change and the EV boom. DRIV’s four -year average dividend yield is 1.42%.
Peer Grade: A
DRIV is currently ranked #39 of 100 ETFs in the Technology Equities ETFs group. Other popular ETFs in this space are Vanguard Information Tech ETF (VGT), SPDR Select Sector Fund – Technology (XLK) and ARK Innovation ETF (ARKK).
While ARKK beat DRIV by gaining 84.3% over the past six months, VGT and XLK returned 24% and 20.3%, respectively, over this period.
Industry Rank: A
The Technology Equities ETFs group is ranked #11 of 123 industries in the StockNews.com universe. As one of the most profitable sectors over the past year, the technology industry was the predominant driver of the stock market over the past year.
Given the global vaccine deployment, many believe this momentum will decline in 2021. However, an increasing reliance on technology for even basic requirements coupled with expanding remote working arrangements should support this industry’s growth. With a comprehensive exposure to the biggest industries operating in this segment, the Technology Equities ETF should enjoy significant momentum in the upcoming months.
Overall POWR Rating: A (Strong Buy)
DRIV is rated a “Strong Buy” due to its solid short- and long-term bullishness and underlying industry strength, as determined by the four components of overall POWR Rating.
As the electric vehicle industry continues to disrupt the broader automobile industry with its innovative prowess, DRIV should increase significantly soon. As two of its top holdings, TSLA and AAPL are currently working on autonomous cars, their growth should be reflected in DRIV’s performance.
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DRIV shares were trading at $26.39 per share on Friday afternoon, down $0.69 (-2.55%). Year-to-date, DRIV has gained 10.10%, versus a 0.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...
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