CSOP Asset Management has launched a new thematic equity ETF in Hong Kong providing exposure to companies operating within the ‘smart driving’ ecosystem.
Melody He, Managing Director, Head of Business Development at CSOP Asset Management.
The CSOP Global Smart Driving Index ETF (3162 HK) has been listed in Hong Kong dollars on the Stock Exchange of Hong Kong.
It comes with a management fee of 0.99% and an expected expense ratio of 1.50%.
According to CSOP, smart driving refers to the entire value chain of advanced automobiles which includes electric vehicles, biodiesel fuel and battery systems, autonomous control electronics, semiconductor manufacturing, and other related industries.
The smart driving ecosystem has flourished in recent years, driven by the global trend towards sustainability as well as improvements in fuel efficiency, driving safety, and vehicle maintenance.
CSOP cites research indicating that the compound growth rate of electric vehicle sales is expected to reach 40% between 2020 and 2025. Additionally, the global electric vehicle market is predicted to approach $600 billion by the end of 2025 with the penetration rate expected to hit 18%, up from just 4% in 2020.
Methodology
The fund is linked to the Solactive Global Smart Driving Index which selects its constituents from a universe of stocks listed in the US, mainland China, or Hong Kong. Eligible stocks must have market capitalizations above HK$5 billion (approx. $640 million) and average daily trading volumes greater than $1m.
The methodology harnesses FactSet’s Revere Business Industry Classification System (RBICS) to select the 50 largest companies classified to industries linked to the smart driving theme. These include alternative energy car manufacturers, fuel cell equipment and technology providers, lithium ore mining and component manufacturers, biodiesel & ethanol fuel manufacturers, emergency & standby power product providers, petrochemical manufacturers, autonomous vehicle producers, analog and mixed-signal semiconductor manufacturers, and producers of automobile comfort, safety, and electronics products.
Constituents are weighted by float-adjusted market capitalization while capping any single company at 8% and the cumulative weight of companies listed in mainland China at 20%. The index is reconstituted and rebalanced on a quarterly basis.
As of the end of July, approximately three-quarters of the index was allocated to stocks listed in the US with the remainder in Chinese A-shares. Semiconductor manufacturers and consumer vehicle manufacturers each made up a third of the total index weight with other significant sector allocations including electrical equipment & power systems (17%), speciality chemicals (9%), and passenger transportation (9%).
Notable positions included Tesla (8.0%), Contemporary Amperex Technology (7.3%), Texas Instruments (7.2%), Uber Technologies (6.8%), NIO (6.8%), and Analog Devices (6.7%).
The fund is the latest addition to CSOP’s suite of ‘future thematic’ ETFs that target companies at the forefront of various disruptive technologies currently reshaping the world. The other ETFs in the suite offer exposure to 5G, cloud computing, healthcare technology, and photovoltaic investment themes.
Melody He, Managing Director, Head of Business Development at CSOP Asset Management, said: “CSOP’s future thematic ETFs have run hot on a boom in investor demand. Through these future-themed ETFs, investors can easily capture the investment opportunities of a smarter, greener, and healthier future.”