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10 Best Autonomous Vehicle ETFs and Stocks to Invest in

10 Best Autonomous Vehicle ETFs and Stocks to Invest in

In this article, we’ll take a look at the 10 best autonomous vehicle ETFs and stocks to invest in. If you want to skip our detailed analysis of these stocks and the AV industry, you can head straight to the 5 Best Autonomous Vehicle ETFs and Stocks to Invest in.

With continuous development and innovation in emerging markets, in addition to the emergence of new technology, various industries around the world have begun to revolutionize. The automotive industry is no exception to this revolution, with the rise of autonomous driving and electrification. Traditional automakers are also not the only ones with an interest in this new trend of autonomous driving, as many tech companies are currently investing in or setting up subsidiaries to oversee autonomous driving.

Alphabet Inc. (NASDAQ:GOOG) and Micron Technology, Inc. (NASDAQ:MU) are two examples of the above. These tech giants are diving into the AV sector just as quickly as companies like Aptiv PLC (NYSE:APTV), which is originally a traditional manufacturer of car parts. Alphabet Inc. (NASDAQ:GOOG) has been investing in the AV industry since 2009 and has continued to research autonomous driving over the years. The car industry as a whole is therefore benefiting from this increasing interest in autonomous driving. With billions being invested in rising technology advancements in this industry, the additional revenue from the auto revenue pool will increase by about 30% to $1.5 trillion by 2030, as noted by McKinsey & Company in a study about the automobile revolution. The study also noted that after major technological and regulatory issues surrounding AVs are resolved, as many as 15% of new cars sold by 2030 will be fully autonomous.

While autonomous driving may seem unrealistic and far-fetched to some, major tech giants like Alphabet Inc. (NASDAQ:GOOG) and Tesla, Inc. (NASDAQ:TSLA) have continued to invest billions of dollars in research and design of autonomous vehicles. According to CNBC in May, the AV market is expected to account for 12% of all new car registrations by 2030. In 2021, equity financing in autonomous vehicles reached $12 billion, a 50% increase in investment compared to 2020. In the US, Alphabet Inc.’s (NASDAQ:GOOG) subsidiary, Waymo, was the largest investor with $5.5 billion invested in AV development and research. Many startups in the AV sector today are supported by large traditional car manufacturers who want to realize autonomous driving in the near future. Motional is one such startup that was set up last year in a joint venture with Hyundai and pilots with Lyft.

Interest in and investment in the AV industry has continued well into 2022. In July, according to Reuters, US company State Farm and Japan’s Tokyo Marine have pledged $111 million in funding for AV tech startup May Mobility. Both auto insurers from the two countries have started to provide crucial support to the AV sector with this move. The $111 million will help May Mobility in its ongoing work with Toyota Motor Corp. The startup has noted that it aims to rid cars of human drivers next year, through its commercial operation to make autonomous vehicles widely available in the market.

photo by This is Engineering RAEng On Unsplash

Now let’s take a look at the 10 best autonomous vehicle ETFs and stocks to invest in.

Our methodology

Using Insider Monkey’s second quarter hedge fund data, we selected stocks of autonomous vehicles that were popular with hedge funds in the past quarter. The stocks usually have positive analyst ratings and price targets, and they have positive growth potential. We’ve considered ETF returns relative to the S&P 500 and expected EPS growth over the next three to five years as some of the factors influencing our selection of these stocks and ETFs. They are ranked by the number of hedge funds holding interests in them, from lowest to highest.

Best Autonomous Vehicle ETFs and Stocks to Invest in

10. Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV)

Number of hedge fund holders: N/A

Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV) is managed by Global X Management Company LLC. It invests in shares of companies in the electric vehicle and autonomous vehicle sectors. The fund aims to track the performance of the Solactive Autonomous & Electric Vehicles Index using the full replication technique.

When the Biden administration took over, Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV) was flagged as a potential all-encompassing bet in light of indicators that the EV sector would be supported under the new administration. The fund’s price return over the past three years was 81.9%, compared to a return of 34.1% for the S&P 500. Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV) had a total return of 85.1% over the same period, compared to a total return of 40.9% for the S&P 500.

Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV), such as Alphabet Inc. (NASDAQ:GOOG), Micron Technology, Inc. (NASDAQ:MU) and Aptiv PLC (NYSE:APTV) is an investment opportunity in the AV industry that many investors are eyeing.

9. KraneShares Electric Vehicles & Future Mobility Index ETF (NYSEARCA:KARS)

Number of hedge fund holders: N/A

KraneShares Electric Vehicles & Future Mobility Index ETF (NYSEARCA:KARS) was launched and continues to be managed by Krane Funds Advisors, LLC. The exchange-traded fund invests in shares of companies in the consumer discretionary, autos & parts, automotive and electric vehicle sectors. It tracks the performance of the Bloomberg Electric Vehicles Index, using the representative sampling technique.

Over the past three years, KraneShares Electric Vehicles & Future Mobility Index ETF (NYSEARCA:KARS) has had a price return of 73.2%, compared to the S&P 500’s price return of 34.1%. The ETF’s total return was 88.6% over the same period, while the S&P 500 had a total return of 40.9%.

8. SPDR S&P Kensho Smart Mobility ETF (NYSEARCA:HAIL)

Number of hedge fund holders: N/A

SPDR S&P Kensho Smart Mobility ETF (NYSEARCA:HAIL) is a publicly traded fund launched by State Street Global Advisors, Inc. and managed by SSGA Funds Management, Inc. It invests in companies in the industrial and transport sectors. Using the representative sampling technique, it aims to track the performance of the S&P Kensho Smart Transportation Index.

In June, SPDR S&P Kensho Smart Mobility ETF (NYSEARCA:HAIL) announced its quarterly distribution of $0.13, with a 30-day SEC yield of 1.06%. The ETF’s price return has been 42.5% over the past three years, compared to the S&P 500’s 34.1% price return. The SPDR S&P Kensho Smart Mobility ETF (NYSEARCA:HAIL) total return of 47.9 % over the same period also outperformed the S&P 500’s total return of 40.9%.

7. Magna International Inc. (NYSE:MGA)

Number of hedge fund holders: 20

Magna International Inc. (NYSE:MGA) is an automotive parts and equipment company. The company dived into the autonomous driving sector with its MAX4 fully autonomous driving platform. The platform can be easily integrated into any vehicle.

On July 14, Morgan Stanley analyst Adam Jonas issued an Overweight rating for Magna International Inc. (NYSE:MGA) shares repeated. Jonas also placed a $79 price target on the stock.

In June, Evercore added ISI Magna International Inc. (NYSE:MGA) to the top core ideas list, noting that the company could be a dormant AutoTech and EV giant. The company cited Magna International Inc.’s (NYSE:MGA) EV manufacturing capabilities and status as a top five global supplier in the AV and EV industries as evidence of its claims. Evercore ISI saw a rise to $150 for the stock.

Magna International Inc. (NYSE:MGA) was found in the 13F holdings of 20 hedge funds in the second quarter of 2022. Their total stake in the company was $175 million. From these funds Point72 Asset Management was the largest stakeholder in the company, with 687,535 shares worth $37.7 million.

Vltava Fund, an asset manager, named Magna International Inc. (NYSE:MGA) in its fourth quarter 2021 investor letter. Here is what it said:

“Of course, not all of our companies are doing better than we expected. magna last year fell slightly short of our expectations. In the case of Magna, the reasons are disruptions in the supply and logistics chains. As a major car supplier, Magna indirectly suffers from the same chip shortages as, for example, BMW. In Magna’s case, the problem is that it doesn’t have the same pricing power vis-à-vis its customers as BMW, and the lower and erratic production is negatively reflected in its profitability.”

6. Aptiv PLC (NYSE:APTV)

Number of hedge fund holders: 43

Aptiv PLC (NYSE:APTV) is a global manufacturer of vehicle components. The company develops and commercializes autonomous vehicles and systems and is continuing its joint venture with Hyundai, Motional, for this purpose. It also provides electrical, electronic and safety technology solutions for the automotive and commercial vehicle markets.

On August 5, Brian Gesuale maintained his Outperform rating for Aptiv PLC (NYSE:APTV) shares. The analyst also set a price target of $145 on the stock.

In July, Oppenheimer noted that Aptiv PLC (NYSE:APTV) continues to avoid harming consumer demand for their products in the face of price increases. Consumer demand has remained strong and Oppenheimer sees supply chain constraints ease in the second half of 2022.

Impax Asset Management was the largest shareholder in Aptiv PLC (NYSE:APTV) in the second quarter, out of 43 hedge funds long in the stock. Ian Simm’s fund owned approximately 4.7 million shares in the company, valued at $417 million. Total stake in the company was $1.6 billion.

ClearBridge Investmentsan asset manager, Aptiv PLC (NYSE:APTV) mentioned in its Q1 2022 investor letter. Here is what they said:

“The acceleration of transport electrification should support electric vehicle (EV)-related shares such as aptiv (NYSE:APTV), which came under pressure in the quarter over concerns that the auto cycle is past its peak. Aptiv offers a range of solutions for the automotive industry, including autonomous driving technologies, safety technologies, components and wiring. APTV’s high exposure to EVs should drive long-term value as EVs continue to grow, boosted by their relative attractiveness as pump prices near historic highs.”

Just like Alphabet Inc. (NASDAQ:GOOG) and Micron Technology, Inc. (NASDAQ:MU), Aptiv PLC (NYSE:APTV) is a strong AV stock-selection hedge funds piling up today.

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Revelation: No. 10 Best Autonomous Vehicle ETFs and Stocks to Invest in was originally published on Insider Monkey.