Global X Plans Electric Car ETF

March 15, 2018

Global X has filed for an ETF that will target electric cars. The Global X Autonomous & Electric Vehicles ETF (DRIV) will select its components from companies in 26 different countries, including the United States and China. Despite the inclusion of China, the vast majority of the countries represented in the index are developed markets.

Methodology

The index underlying the proposed fund is driven by artificial intelligence, relying on natural language processing to determine the degree of exposure a company has to three different categories: electric vehicles, electric vehicle components and autonomous vehicle technology. Each company is assigned a score in those three categories, with the index selecting the highest-ranking companies in each of the three segments. Companies can be drawn from across the market-capitalization-size spectrum.

The methodology selects the top 15 companies in electric vehicles, the top 30 in electric vehicle components and the top 30 in autonomous vehicle technology. The chosen components are weighted by modified market capitalization, with rebalancings occurring twice a year, the prospectus says.

The fund is set to list on the Nasdaq with an expense ratio of 0.68%.

Competing Products

The KraneShares Electric Vehicles and Future Mobility Index ETF (KARS) launched in January at a price of 0.69% and currently has $26.2 million in assets under management. Meanwhile, the Innovation Shares NextGen Vehicles & Technology ETF (EKAR) launched in February and has just $2.6 million in assets; it charges 0.65%.

Like DRIV, EKAR uses artificial intelligence and natural language processing to pinpoint companies involved in the targeted industry. AI has become more common in ETFs—mainly thematic ones—with keywords used to search vast amounts of data for companies associated with different investment themes. The idea is to ferret out companies that might be overlooked if public filings were the main or sole source of information.

Contact Heather Bell at [email protected]

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