The world is going through a digital revolution, with innovative companies transforming the world we live in faster than ever before. This could not be more true for the Electric Vehicle space.
Investors want to be a part of this change – investing in companies which are tackling the challenges of tomorrow, today. With our new Electric Vehicle Innovation fund we are providing investors a simple and transparent way to access global innovation from New Zealand. The best part – you don’t need to pick individual stocks.
The rise of Electric Vehicles (EVs)
Electric Vehicles (EVs) have been proposed and designed for over 20 years, but only now has EV performance, the ecosystem and consumer adoption reached general acceptance. Increased chatter by Kiwi investors, as well as climbing sales of EVs is evidence of this.
Despite passenger vehicle sales falling 22% in 2020, the EV market share of new sales continued to grow. In fact, it’s grown 470% in 5 years. If that doesn’t say a movement, we’re not sure what else does!
Disruptive innovation is reshaping our economic landscape. It’s important, now more than ever, that we as investors are well equipped for this shift.
So, who’s in the Electric Vehicle Innovation Fund?
Let’s start by saying this isn’t your average Electric Vehicles fund. Firstly, it’s only the 4th EV fund in the world. Secondly, this fund does more than focusing solely on individual EV manufacturers, such as Tesla. It also comprises companies that cover the manufacturing and supply of critical EV components and infrastructure. This approach means, as an investor, you have broad exposure to the industries pushing the EV movement forward.
Here are the top 10 companies which make up the fund (as at January 2021):
- Blink Charging Co. : An EV Charging Station designer, manufacturer and operator.
- Plug Power : A leading provider of clean hydrogen and zero-emission fuel cell solutions.
- Ballard Power Systems : Global provider of innovative clean energy and fuel cell solutions.
- Workhorse Group : A technology company which designs and builds high performance electric vehicles and aircraft.
- Tesla : An electric vehicle manufacturer and clean energy company.
- Tata Motors : The biggest automobile manufacturing company in India.
- Dana Incorporated : Global leader in engineering, manufacturing and distributing power-conveyance and energy-management solutions.
- NIO : A lifestyle brand which develops smart, high-performance electric vehicles.
- Gentherm : A global developer and marketer of thermoelectric management technologies for a broad range od heating, cooling and temperature controlling systems.
- Other – all other holdings in the fund.
How do you make it into the Fund?
Knowing the eligibility criteria of an index or how companies are added and dropped, helps us understand the companies we’re investing in. It also helps to gauge the level of risk we may be taking on.
The Kernel S&P Kensho Electric Vehicle Innovation Fund tracks the S&P Kensho Electric Vehicles℠ Index. This uses an entirely rules-based methodology to uncover companies involved in the electric vehicles sector and surrounding ecosystems.
It is composed of US-listed companies focused on producing electric road vehicles and associated subsystems. As well as powertrains, energy storage systems, clean fuel technology, such as hydrogen fuel cells and charging infrastructure.
To be eligible for inclusion, you must:
- Be listed in the U.S. on either the NYSE, NASDAQ or CBOE.
- Have a minimum float-adjusted market cap of $100M.
- All companies must also pass minimum liquidity requirements – i.e. the company must be frequently traded and readily liquid.
This high-growth fund is one of our highest risk funds to date alongside our Kernel S&P Kensho Moonshots Innovation Fund. Both funds have a risk indicator of 7 and can act as satellite in an investment portfolio alongside broad market core funds, such as our Global 100 Fund.
So, who’s Kensho anyway?
Kensho is a Massachusetts-based start up that has concentrated on artificial intelligence and analytics for big financial institutions. Launching in 2013, they went on to be acquired by S&P Global in 2018 for a cool US$550 million. Since then, they have continued to operate as a stand alone brand.
Not to be skimmed over, Kensho is a first mover in applying machine learning techniques to financial questions. Their initial plan was to use machine learning to make complex financial analysis as easy as a search in Google, replacing human brokers and analysts. How does one do this?
By building an algorithm dubbed Warren (after Warren Buffett) that could pore through millions of market data points to find correlations and arbitrage opportunities. The rest was history.
Today, Kensho leverages S&P Global’s data to research, develop and implement leading AI and machine learning capabilities that drive fact-decision making. Together, they have a range of Indices, including the S&P Kensho Moonshots Index, S&P Kensho Robotics Index, and of course the S&P Kensho Electric Vehicles Index.
If you’re as impressed as we are with Kensho, be sure to check them out.
Fitting EVs into your investment portfolio
While everyone’s investment portfolio will look different depending on their time horizon and goals, thematic funds – like our EV fund – have historically played the role of a ‘satellite’ in an investment strategy. Our suggestion is that 10-15% of your investible wealth could be invested into a satellite.
This is in contrast to core investing, where you are investing broadly across markets and sectors through funds like our Global 100.
When investing in a thematic fund, you are making a decision that a theme will produce an above average return in comparison to the rest of the market. It’s important to note that thematic funds are high-growth funds with a higher level of risk. It’s most important to understand how these can fit in with your existing investments to remain diversified.
You can read more about how thematic funds can fit into your investment portfolio in our latest blog.
The must-knows about the Kernel S&P Kensho Electric Vehicle Innovation Fund:
- The 4th EV Index fund in the world!
- The S&P Kensho Electric Vehicles Index measure the performance of companies focused on producing electric vehicles and associated subsystems
- The companies in this Fund must be listed in the U.S. on either the NYSE, Nasdaq or Cboe
- Companies in the index must have a minimum float-adjusted market cap of $100M
- All companies must also pass minimum liquidity requirements – i.e. the company must be frequently traded and readily liquid
Interested to know more about our Electric Vehicle Innovation Fund? Click the button below for our full fund overview, including index and fund returns, the full fund holdings and more.