mutual funds rushing to invest in electric vehicles with new schemes

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In recent years, a slew of new theme-based mutual funds (MFs) has joined the market. As more Indian automakers offer electric vehicles, it appears that electric vehicles are the flavor of the season (EV). SEBI recently received applications from three mutual funds for electric car funds. Navi Electric Vehicles and Driving Technology Fund of Funds, Mirae Asset Electric Autonomous Vehicle ETF Fund of Funds, and Nippon India S&P EV Index Fund are three of them. Electric vehicles are still in their early stages of development and are emerging as viable alternatives to fossil fuel-guzzling automobiles. 

An electric car and autonomous driving fund would allow shareholders to engage in a subject that has a large runway for growth because it is still in its infancy. However, there are already encouraging signals of potential growth, adds Swarup Mohanty, Mirae MF's chief executive officer.Electric vehicle funds may wind up holding traditional carmaker stocks, as several of the world's largest automakers are currently devoting major resources to the development of electric vehicles. Take, for example, Volkswagen of Germany, which aims to sell 70% of its automobiles in Europe by 2030.

The electric vehicle industry is still in its infancy. Companies are still producing automobiles with internal combustion engines, but some of the world's most well-known brands are now concentrating their efforts on EV production. "The underlying funds also seek for growth potential in ancillary industries catering to EVs, such as semiconductors and batteries, in various parts of the world," says Siddharth Srivastava, Mirae MF's Head-ETF products.

The Mirae Asset Electric & Autonomous Vehicles ETFs Fund of Fund will invest in the Global X Autonomous and Electric Vehicle ETF – DRIV (launched in 2018), the Global X Lithium and Battery Tech ETF (launched in 2010), and may also invest in the Global X China Electric Vehicle and Battery ETF (launched in 2010). (launched in 2020). The fund house hasn't made a final decision yet. The DRIV will also put money into self-driving car technologies. Global X ETFs, situated in the United States, has created exchange-traded funds on a variety of topics and is part of the Mirae Asset Financial Group.

While electric vehicle sales have grown significantly in the United States, Europe, and China, Indian purchasers are also showing interest. 

According to the EY Mobility Consumer Index, approximately 90% of Indian customers are willing to pay a premium for an electric vehicle, with over 40% willing to pay a premium of up to 20%. There has been a big shift in awareness in the last year and a half," says Vishal Jain, Head-ETF, Nippon Life India Mutual Fund. "Now there are more talks on whether electric automobiles should be purchased instead of ordinary combustion engine vehicles. The transition to non-fossil fuels is moving at a rapid pace," he continues. Electric vehicle technology is continually developing. Lithium-ion batteries and hydrogen cells are currently seen as technologies capable of powering electric vehicles. These grants will attempt to capture the evolution of electric vehicle technology.

 

The S&P Kensho Electric Vehicles Index, which invests in US-listed EV firms, will be tracked by the Nippon India S&P EV Index Fund.Companies engaged in the manufacturing of electric road vehicles, EV engine systems, energy storage devices, charging networks, and clean energy technologies including such hydrogen fuel cells could be included in the index. It's a brand-new index that debuted in 2018. The Navi MF, which is sponsored by Sachin Bansal, has launched an electric vehicle fund that aims to track the performance of the STOXX Global Electric Vehicles & Driving Technology NET Index. Companies involved in the production of electric vehicles and assisted driving technology are included in this index. The index first appeared in 2012.

Each fund aims to track a different index or exchange-traded fund (ETF). As a result, each scheme will be unique in terms of the companies and businesses that will be invested. Because the electric vehicle industry is still in its infancy, some indexes may favor certain technologies over others, depending on the stock selection criteria. Investors considering an EV fund should examine the underlying indices or ETFs, as well as their portfolios.

Anubhav Srivastava, the partner, and fund manager at Infinity Alternatives, adds, "This would aid in knowing what kind of sub-segments the fund is targeting inside the EV industry. 


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