By Alastair Sharp
TORONTO — A Canadian investment fund will launch the world's first "future car" exchange-traded fund on Friday, giving investors one-stop access to companies involved in electric, autonomous and connected-car supply chains.
The Evolve Funds Automobile Innovation Index ETF includes Tesla and other automakers spending heavily on self-driving ambitions as well as battery makers, semiconductor companies and other players to help investors trade on the major changes affecting the automotive industry.
"Five years ago we didn't have the blind-spot checker, the lane assist, and now you've got parking assist; technology has been getting integrated into vehicles to make them safer, it's just going to intensify," Evolve Funds Group CEO Raj Lala said in a phone interview.
The 32 equally-weighted stocks that make up the fund's initial cohort also includes suppliers such as Delphi Automotive Plc and Visteon Corp, semiconductor companies Cirrus Logic Inc, Infineon Technologies AG and Nvidia Corp, hydrogen fuel cell company Plug Power Inc and industrial battery maker EnerSys.
"We're not trying to pick the one or two winners," said Elliot Johnson, Evolve's chief operating officer. "We wanted to make sure we're making a bet that's broad, but also specific to the activities that are going on."
Many of the stocks included have jumped sharply over the last year as the portion of cars with internet connectivity jumps, China and others plan to ban cars than only run on gasoline or diesel, and ridesharing increases in popularity.
"That suggested to us that there's a lot of investor appetite out there searching for ways to express their belief in the theme," Johnson said.
Evolve Funds worked with German index provider Solactive AG to create the passively traded model, which will have hedged and unhedged versions priced in Canadian dollars. A U.S.-dollar denominated version will follow within several weeks.
The fund choose the five automakers with the highest research and development to sales ratio, which include Ford Motor Co, General Motors Co, Tesla Inc and Volkswagen AG <VOWG_p.DE>.
The ETF is the third instrument Evolve has launched, days after launching cybersecurity and gender diversity products. The fund is also seeking Canadian regulatory approval for one to track bitcoin.
Reporting by Alastair Sharp