A new exchange-traded fund is zeroing in on electric vehicle manufacturers.
Defiance ETFs runs the Solactive Pure U.S. Electric Vehicle ETF — which is also known as the Pure EV Index fund. It’s designed to give investors a way to make a concentrated bet on the space.
“We realized that investors are buying a lot of ETFs for electric vehicle exposure. But if you break down what is in those ETFs because of the diversification role, they hold stocks like Apple, Microsoft, [and] Nvidia,” Defiance ETFs’ Sylvia Jablonski told CNBC’s “ETF Edge” on Monday. “So instead of just buying Tesla, you want a little more exposure to the space.”
Tesla is the top holding for many electric vehicles ETFs after gaining more than 98% so far this year.
Other EV ETFs including Global X autonomous & electric vehicles ETF and KraneShares Electric Vehicles & Future Mobility ETF have holdings in companies that produce EV components or are tech-related.
However, the Pure EV Index fund is composed of only the five largest market-cap EV makers: Tesla, Nio, Rivian, Li Auto and Xpeng.
The companies in the fund must also “derive at least 50% of their annual revenue or operating activity from the development or manufacturing of electric vehicles” and have “high trading volume and liquidity,” according to the Defiance ETFs website.
The ETF also exposes investors to “the world’s largest economies” with three Chinese and two U.S. auto manufacturers, the firm’s CEO and chief investment officer said.
Jablonski thinks recent policy proposals like the federal infrastructure bill and EV tax credits will help grow the industry even more.
The Pure EV Index fund’s total net assets are currently $5.1 million. As of Friday’s close, the ETF is up more 18% since its June 12 launch.