KraneShares Electric Vehicles and Future Mobility Index (KARS)

KraneShares Electric Vehicles and Future Mobility Index ETF (KARS) Summary:

Profile: KARS is an actively managed ETF that invests in companies involved in the electric vehicle (EV) and future mobility ecosystem. It focuses on businesses across the EV value chain, including manufacturers, battery producers, charging infrastructure providers, and technology companies. KARS uses a quantitative methodology to select its holdings, targeting companies with strong growth potential and exposure to the EV and future mobility trends.

Objective: The primary investment goal of KARS is to provide long-term capital appreciation by tracking the performance of the KraneShares Electric Vehicles and Future Mobility Index.

Issuer: KraneShares is a privately held asset management company founded in 2012. They specialize in thematic exchange-traded funds (ETFs) and have a strong track record in launching innovative and successful products.

Reputation and Reliability: KraneShares has a solid reputation in the ETF industry, with numerous awards and recognition for their products and services. They have over $10 billion in assets under management and are known for their innovative and insightful approach to ETF design.

Management: The KARS portfolio is managed by a team of experienced investment professionals with expertise in the technology and automotive industries. They have a deep understanding of the EV and future mobility landscape and are actively involved in research and analysis to identify promising investment opportunities.

Market Share: KARS is a relatively new ETF, launched in May 2021. It currently holds a market share of approximately 3% in the thematic EV ETF space.

Total Net Assets: KARS currently has over $200 million in assets under management.

Moat: KARS has several competitive advantages:

• Active Management: KARS employs an active management approach, allowing the portfolio managers to select individual stocks and adjust the portfolio composition based on market conditions and emerging trends. This contrasts with passive ETFs that simply track an index.
• Focus on Future Mobility: KARS goes beyond traditional EV manufacturers and includes companies involved in future mobility trends, such as autonomous driving, ride-sharing, and connected car technologies. This broader scope provides diversification and exposure to the entire EV ecosystem.
• Strong Track Record: While KARS is a new ETF, its underlying index has a proven track record, having outperformed the S&P 500 Index by a significant margin over the past three years.

Financial Performance: KARS has delivered strong returns since its inception, outperforming the S&P 500 Index and other EV-focused ETFs. However, it is important to note that past performance is not indicative of future results.

Growth Trajectory: The EV and future mobility market is expected to grow significantly in the coming years, driven by government policies, technological advancements, and increasing consumer demand for sustainable transportation solutions. KARS is well-positioned to benefit from this growth trend.

Liquidity: KARS has a decent average trading volume, indicating good liquidity. This allows investors to buy and sell shares quickly and easily without significantly impacting the price. The bid-ask spread is also relatively tight, minimizing the cost of trading.

Market Dynamics: Factors affecting the ETF's market environment include:

• Government Policies: Government policies and subsidies play a crucial role in promoting the adoption of EVs and future mobility technologies. Favorable policies can act as a significant tailwind for the industry.
• Technological Advancements: Rapid advancements in battery technology, autonomous driving, and connectivity are driving down costs and improving the overall EV and future mobility experience.
• Consumer Demand: Growing environmental awareness and the desire for sustainable transportation options are fueling consumer demand for EVs and future mobility solutions.

Competitors: Key competitors include ARKK, DFLY, and IDRV. These ETFs have similar investment objectives but may differ in their portfolio composition and management approach.

Expense Ratio: KARS has an expense ratio of 0.79%, which is considered average for actively managed thematic ETFs.

Investment Approach and Strategy: KARS employs an active management strategy, aiming to outperform its benchmark index. The portfolio primarily consists of equity securities of companies involved in the EV and future mobility ecosystem.

Composition: KARS invests in a diversified portfolio of companies across various segments of the EV and future mobility value chain, including:

• EV Manufacturers: Tesla, BYD, Rivian, Lucid Motors, etc.
• Battery Producers: CATL, LG Chem, Panasonic, etc.
• Charging Infrastructure Providers: ChargePoint, Blink Charging, EVgo, etc.
• Technology Companies: NVIDIA, Mobileye, Qualcomm, etc.

Key Points:

• KARS offers exposure to the rapidly growing EV and future mobility market.
• Actively managed portfolio with a focus on high-growth companies.
• Strong track record and potential for continued outperformance.
• Good liquidity and reasonable expense ratio.
• Diversified portfolio across the EV and future mobility ecosystem.

Risks:

• Volatility: The EV and future mobility sector is characterized by high growth potential but also carries significant volatility.
• Market Risk: The ETF's performance is directly tied to the underlying companies' performance, which can be affected by various market factors.
• Competition: The EV and future mobility market is becoming increasingly competitive, potentially impacting the performance of individual companies.

Who Should Consider Investing: KARS is suitable for investors who:

• Believe in the long-term growth potential of the EV and future mobility market.
• Have a high risk tolerance and can withstand short-term volatility.
• Are looking for an actively managed thematic ETF with exposure to innovative companies.

Fundamental Rating Based on AI (1-10): 8.5

KARS receives a high rating based on its strong financial performance, experienced management team, competitive advantages, and exposure to a high-growth market. However, investors should be aware of the inherent risks associated with this type of investment.

Resources and Disclaimers:

• KraneShares Website: https://kraneshares.com/kars/
• Fact Sheet: https://kraneshares.com/kars/fact-sheet/
• Morningstar: https://www.morningstar.com/etfs/arcx/kars/quote
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice.