KraneShares, a New York-based China-focused ETF issuer, has launched the KraneShares Electric Vehicles and Future Mobility ETF (KARS US) on NYSE Arca, providing thematic exposure to the fast-growing electric vehicle industry and the technologies shaping the future of transportation.
Over half (54%) of new car sales are projected to be electric by 2040.
KARS tracks the Solactive Electric Vehicles and Future Mobility Index which includes globally listed companies from across the ‘future mobility’ ecosystem.
This includes firms involved in the production of electric vehicles or their components, or engaged in other initiatives that may change the future of mobility. Such firms include those operating in industries including electric vehicle production, autonomous driving, shared mobility, lithium and copper production, lithium-ion batteries, hydrogen fuel cell manufacturing and electric infrastructure.
KARS may seem like a partial change of direction for KraneShares, which is known for its pure-play China-focused investment strategies; however, the future mobility theme is closely linked to the Chinese growth story. China is currently the world’s largest electric vehicle market, and future mobility initiatives are gaining particularly strong momentum in China as the country moves to address pollution concerns and a rapidly urbanizing population.
China is the second largest country exposure at 17%, behind the US with 43%, while German-listed equities also play a significant role at 16% index weight.
“Chinese companies like Baidu are developing artificial intelligence necessary for autonomous driving, and BYD is a world leader in electric vehicles and electric battery manufacturing,” said Jonathan Krane, CEO of KraneShares. “Global companies within the future mobility ecosystem such as Tesla, Nividia, and Albemarle are also capitalizing on strong demand from Chinese and global consumers.”
The enhanced convenience, cost-effectiveness, improved safety, and pollution reduction benefits provided by vehicles in the future mobility space has led some analysts to predict outstanding growth for the sector over the next few decades.
Bloomberg New Energy Finance predicts that 54% of new car sales and 33% of the global car fleet are projected to be electric by 2040, while Morgan Stanley see the global electric vehicle market commanding $2.7 trillion in total investment by this stage.
With a bright future predicted, KARS’ underlying index has also delivered remarkable performance since its inception in March 2012, although the index may be subject to standard back-testing biases. Over this period, the index has returned 18.7% per annum with an annualized standard deviation of 15.2%.
Source: Solactive.
The fund has total annual fund operating expenses of 0.69%.