DRIV - DRIV: Good Theme But Weak Momentum And Challenged Consumer

2023-10-31 22:53:18 ET

Summary

• Global X Autonomous & Electric Vehicles ETF provides exposure to companies in the electric vehicles and autonomous driving segments.
• DRIV offers high growth potential in the expanding EV market and advancing clean technologies.
• DRIV stands out with its diversified holdings and strong performance compared to peer ETFs in the EV and autonomous driving industries.

Believe it or not, there are more ways to invest in autonomous vehicles than just Tesla (TSLA). The investment case for the electric vehicle space is compelling long-term, but short-term momentum isn't there. That's why the Global X Autonomous & Electric Vehicles ETF ( DRIV ) is worth keeping on your watch list for an eventual turn.

DRIV is an investment fund that provides exposure to companies active in the electric vehicles and autonomous driving segments. The fund includes companies involved in the production of electric vehicles, electric vehicle components, and autonomous vehicle technology. As the EV market continues to grow globally and autonomous driving technologies advance, DRIV provides a unique opportunity for investors to tap into these high-growth sectors.

I think thematically, it's a good area to focus on, but as I noted, short-term momentum just isn't there. And perhaps for good reason.

Key Features of DRIV

• High Growth Potential : With global EV registrations increasing significantly each year and EVs representing only a small fraction of new cars sold, there remains significant room for further market penetration and growth.

• Advancing Clean Technologies : EVs produce zero direct emissions, contributing to reduced greenhouse gas emissions and improved air quality. Additionally, advances in autonomous driving technology hold the potential to enhance road safety.

• Unconstrained Approach : The fund takes a holistic approach to investment, with global exposure across multiple sectors and industries.

DRIV's Holdings

DRIV's holdings are diversified, with the fund investing in a range of companies operating in the EV and autonomous driving segments. The top holdings include globally recognized technology companies such as Alphabet Inc. ([[GOOG]], [[GOOGL]]), Apple Inc. (AAPL), and NVIDIA Corporation (NVDA), as well as renowned automakers like Tesla, Inc. and Toyota Motor Corporation ([[TM]], [[TOYOF]]). The fund also holds shares in Intel Corporation (INTC), QUALCOMM Incorporated (QCOM), Honeywell International (HON), Microsoft Corporation (MSFT), and Honda Motor Co., Ltd. ([[HMC]], [[HNDAF]]).

It's an interesting mix - looks more like a Tech fund than a pure auto play. But I suppose that's to be expected.

DRIV vs. Peer ETFs

When compared to its peers like First Trust S-Network Future Vehicles & Technology ETF ( CARZ ) and KraneShares Electric Vehicles and Future Mobility Index ETF ( KARS ), DRIV stands out in terms of its performance and diversified exposure, and this may largely be due to the higher purer tech exposure in the holdings. While CARZ mainly focuses on the technological aspects of EVs and KARS is heavily weighted towards Asian markets, DRIV provides more exposure to various sectors and regions involved in the EV and autonomous driving industries.

Risks and Opportunities

Like any investment, investing in DRIV comes with its share of risks and opportunities. On the one hand, the companies in which DRIV invests may be subject to rapid changes in technology, intense competition, rapid obsolescence of products and services, loss of intellectual property protections, evolving industry standards, and changes in business cycles and government regulation. On the other hand, the increasing global focus on emission reduction and the advancement of autonomous driving technology present significant growth opportunities.

I also think there's real risk in terms of auto demand more generally as loan delinquencies rise against a tapped-out consumer having to deal with much higher rates than years ago. That serves as a broader headwind for the space more broadly.

Conclusion

Bottom line? DRIV presents an attractive investment opportunity for those looking to gain exposure to the high-growth EV and autonomous driving sectors. The fund's diversified holdings, strong performance relative to its peers, and potential for future growth make it a compelling option for investors. I just don't know if you want to start allocating now given weak momentum overall.

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