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Evolve Launches Autonomous Vehicles Investment Fund

by Sam Chase
For investors interested in the automotive space, these are heady times, with a tremendous number of interesting business opportunities -- and an equal number of potential busts.

Segments of the industry including connected car technology, self-driving cars and electric vehicles -- or any combination of the three -- have exploded in recent years, although that growth is nothing compared to what is projected to take place in the years to come. That bright future doesn't make it easier to pick the specific companies worthy of financial backing. The space is new, crowded and largely unproven.

Deciding on individual plays still involves a lot of guesswork.

To many, the idea of betting on the overall category sounds far less risky than backing individual stocks in the AV, EV or connected car sectors.

Thanks to a first-of-its-kind exchange-traded fund offering from Canada's Evolve Funds, that type of investment is now possible.

Introduced on the Toronto Stock Exchange on September 29, the Evolve Funds Automobile Innovation Index ETF (trading under the symbol, CARS) and the Evolve Active Canadian Preferred Share ETF (DIVS) allow investors the opportunity to hitch their wagon to various parts of the supply chains for electric vehicles, autonomous vehicles and connected cars in a single investment product.

In the next few weeks, a US dollar version of the offering will become available.

"We believe there's a place for active and passive ETFs in client portfolios," Evolve president and CEO Raj Lala wrote in a statement. "The Evolve Automobile Innovation Index ETF has been designed to give Canadian investors access to an exciting passive investment opportunity provided by the transformation of the automobile, and the Evolve Active Canadian Preferred Share ETF will give investors access to an actively managed portfolio of preferred shares sub-advised by Foyston, Gordon & Payne Inc."

The initial offering includes 32 equally-weighted stocks that span the broad range of industries and sub-industries that have found themselves in the thick of developing the automobiles of tomorrow. Tesla, Delphi Automotive and Nvidia rank among the bigger-name companies whose stocks are included. Battery makers, semiconductor manufacturers and autonomous system designers comprise some of the other enterprises involved.

"We're not trying to pick the one or two winners," Evolve COO Elliot Johnson told Reuters. "We wanted to make sure we're making a bet that's broad, but also specific to the activities that are going on."

The so-called "future car" exchange-traded fund is the third such offering from Evolve, and the industry is also a significant part of another cybersecurity ETF. The same network capabilities that make connected cars such a game-changer can also make the technology vulnerable to hackers, a reality that has sent automakers scrambling to employ cybersecurity experts. Symantec Corp., the highest-weighted holding in Evolve's cybersecurity ETF at 8.36%, is deeply involved in protecting the automobile of the future.

When projecting five or ten years down the line, it's anyone's guess as to which particular companies will emerge as leaders in developing connected cars, electric cars and self-driving cars. But it's everyone's guess that all three spaces -- and their intersections -- are substantial growth industries, making a wide-spanning investment seem like a smart bet.

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