As China grows to become a powerhouse in the EV space, a brand new China EV ETF debuts on SGX. Motley Fool Asset Management launches two new ETFs. A thematic ETF focusing on plant-based innovation arrives. A brand new CRISPR gene editing ETF debuts, yay or nay? Discover the latest happenings in the ETF industry.
Chloe Nadia Halim | Published on 21 Jan 2022
Launch of the first China EV ETF on SGX
Propelled by growing environmental awareness and technological advancements, the electric vehicle and future mobility (EVFM) industry is one of the world’s fastest-growing industries.
China is the market leader within this space, and is poised to maintain its dominant position in years to come. Seeing the bright prospects of China’s EVFM industry, the Nikko AM-StraitsTrading MSCI China Electric Vehicles And Future Mobility ETF (SGX:EVS) was launched.
EVS seeks to deliver long-term capital growth by replicating the returns of the MSCI China All Shares IMI Future Mobility Top 50 Index. The index tracks the performance of Chinese companies listed in the US, Hong Kong, China, and other exchanges that expect to derive significant revenue from energy storage technologies, electric vehicles, autonomous vehicles, shared mobility, and new transportation methods.
The ETF will also be the first China EV ETF listed on SGX. It comes with an expense ratio of 0.70% and is available in two currencies – SGD and USD. Hence, local investors who are interested in riding on the long term growth in China’s EVFM ecosystem will no longer need to access overseas exchanges to find such opportunities.
Currently, the closest competitor to EVS, is the Global X China Electric Vehicle and Battery ETF (HKEX:2845). Both ETFs have holdings in prominent Chinese battery manufacturers such as Contemporary Amperex Technology, BYD, and EVE Energy. Additionally, China’s leading lithium producer Jiangxi Ganfeng Lithium, is also reflected in both their top ten holdings. We will be doing a more in depth comparison of these two ETFs in an upcoming article, so stay tuned.
Table 1: Comparison against the Global X China EV & Battery ETF
| Name of ETF | Expense Ratio | AUM (USD mil) | Average Daily Volume (‘000) | Inception Date |
| Nikko AM-StraitsTrading MSCI China Electric Vehicles And Future Mobility ETF (SGX:EVS) | 0.70% | N.A | N.A | 20 January 2022 |
| Global X China Electric Vehicle and Battery ETF (HKEX:2845) | 0.68% | 7,750 | 395.4 | 17 January 2020 |
| Source: Bloomberg Finance L.P., iFAST CompilationsData as of 18 January 2022 |
Motley Fool launches two new ETFs
Motley Fool Asset Management, which is an affiliate of financial and investing advice company The Motley Fool, has launched two new ETFs, the Motley Fool Capital Efficiency 100 Index ETF (NYSE:TMFE) and Motley Fool Next Index ETF (NYSE:TMFX).
Both funds draw their investable universe from a list of every company that is actively recommended by a Motley Fool analyst, or among the 150 highest-rated companies in a database following the company’s team of analysts and newsletter writers.
TMFE then ranks those companies based on “capital efficiency,” a measure of how much return a business generates from invested capital. The ETF tracks the performance of the highest-scoring stocks in the universe as ranked by capital efficiency.
Some of TMFE’s top holdings include large-cap names such as Visa, Johnson & Johnson, Meta Platforms, Apple, and Alphabet.
Table 2: Top 10 holdings of TMFE
| Rank | Holding Name | Net Assets (%) |
| 1 | Visa Inc. | 5.36 |
| 2 | Johnson & Johnson | 5.20 |
| 3 | Meta Platforms Inc. | 5.14 |
| 4 | Apple Inc. | 5.09 |
| 5 | Alphabet Inc. | 5.05 |
| 6 | United Health Group Inc. | 5.01 |
| 7 | Microsoft Corp | 4.95 |
| 8 | Home Depot Inc. | 4.84 |
| 9 | Amazon.com Inc. | 4.79 |
| 10 | MasterCard Incorporated | 4.74 |
| Source: Motley Fool., iFAST CompilationsData as of 20 January 2022 |
On the other hand, TMFX aims to capture exposure to recommended stocks in the universe, by eliminating the 100 largest-cap companies in that universe from contention. The index then selects the next largest eligible stocks for inclusion, thereby tracking the performance of mid-and-small-cap US companies.
Both these ETFs come with an expense ratio of 0.50%.
Table 3: Top 10 holdings of TMFX
| Rank | Holding Name | Net Assets (%) |
| 1 | Arista Networks Inc. | 2.07 |
| 2 | McKesson Corporation | 2.07 |
| 3 | Cummins Inc. | 1.78 |
| 4 | The Trade Desk Inc. | 1.78 |
| 5 | Corning Inc. | 1.65 |
| 6 | Nasdaq Inc. | 1.62 |
| 7 | Zebra Technologies Corporation | 1.48 |
| 8 | Cerner Corporation | 1.45 |
| 9 | MongoDB Inc. | 1.39 |
| 10 | McCormick & Company Inc. | 1.37 |
| Source: Motley Fool., iFAST CompilationsData as of 20 January 2022 |
A new thematic ETF focusing on plant-based innovation debuts
Our food and materials supply chain are on the verge of a global shift, as the current system is inefficient and unsustainable. Pressing problems such as food security, climate change, deforestation, and animal cruelty are some of the many issues that need to be addressed.
The focus on innovating and improving the current food and materials supply chain, thus represents an area of opportunity. A more efficient plant-based food system that uses less land and water, and emits fewer greenhouse gases is one of the answers to this challenge.
With this in mind, the plant-based food industry has bright prospects. According to Boston Consulting Group, the plant-based food industry is expected to grow 740% from USD 39 billion to USD 290 billion by 2035.
To capitalise on this, newly formed investment advisor VegTech Invest debuted an ETF, called the VegTech Plant-based Innovation & Climate ETF (NYSE:EATV). This actively managed ETF includes 37 publicly traded companies innovating with plants and plant-derived ingredients and producing primary products that are animal-free, to propel a less damaging and resource-intensive supply system.
Notable positions include Beyond Meat (8.6%), MGP Ingredients (8.1%), Amyris (7.2%), ELF Beauty (6.8%), and Oatly (5.2%). The ETF comes with an expense ratio of 0.75%.
Investors interested in thematic strategies on food technology may also find other similar ETFs such as the Global X AgTech & Food Innovation ETF (NASDAQ:KROP) and VanEck Future of Food ETF (NYSE:YUMY), which come with expense ratios of 0.50% and 0.69%, respectively.
Table 4: Comparison against similar ETFs
| Name of ETF | Expense Ratio | AUM (USD mil) | Average Daily Volume (‘000) | Inception Date |
| VegTech Plant-based Innovation & Climate ETF (NYSE:EATV) | 0.75% | 3.14 | 10.7 | 28 December 2021 |
| VanEck Future of Food ETF (NYSE:YUMY) | 0.69% | 2.38 | 3.5 | 2 December 2021 |
| Global X AgTech & Food Innovation ETF (NASDAQ:KROP) | 0.50% | 5.73 | 4.4 | 14 July 2021 |
| Source: Bloomberg Finance L.P., iFAST CompilationsData as of 18 January 2022 |
A brand new CRISPR gene editing ETF debuts: Yay or nay?
Gene editing is the process whereby DNA strands are edited to remove and/or replace damaged or mutated parts of human genomes that cause diseases like diabetes, cystic fibrosis, sickle cell disease, cancer and more.
When it comes to gene editing, CRISPR (clustered repeating interspaced short palindromic repeats), is the most commonly used technology. It acts like a cut-and-paste tool within cells, to modify DNA and correct mutations.
Seeing the potential of gene-editing technology, Kelly ETFs launched the Kelly CRISPR & Gene Editing Technology ETF (NASDAQ:XDNA) on 12 January 2022. The ETF is designed to capitalise on the next generation of healthcare by investing in companies disrupting the genomic and life science industries.
XDNA tracks the Strategic CRISPR & Gene Editing Technology Index, which measures the performance of developed market companies that specialise in DNA modification systems and technologies. The subsectors of this fund include CRISPR & Gene Editing Technology, Gene Editing Development Solutions and Gene Editing Sequencing Solutions.
However, the ETF has an expense ratio of 0.78%, which is not particularly attractive considering that there are cheaper alternatives available. For instance, the iShares Genomics Immunology and Healthcare ETF (NYSE:IDNA) as well as the Global X Genomics & Biotechnology ETF (NASDAQ:GNOM) come at an expense ratio 0.47% and 0.50% respectively. Hence, it’s a nay for us.
Table 5: Comparison of similar ETFs that focus on gene editing
| Name of ETF | Expense Ratio | AUM (USD mil) | Average Daily Volume (‘000) | Inception Date |
| Kelly CRISPR & Gene Editing Technology ETF (NASDAQ:XDNA) | 0.78% | 1.44 | 1.5 | 12 January 2022 |
| ARK Genomic Revolution ETF (NYSE:ARKG) | 0.75% | 4,240 | 3.0 | 31 October 2014 |
| Global X Genomics & Biotechnology ETF (NASDAQ:GNOM) | 0.50% | 215.31 | 108.3 | 9 April 2019 |
| Invesco Dynamic Biotechnology & Genome ETF (NYSE:PBE) | 0.58% | 248.73 | 7.3 | 23 June 2005 |
| iShares Genomics Immunology and Healthcare ETF(NYSE:IDNA) | 0.47% | 279.63 | 76.9 | 13 June 2019 |
| Source: Bloomberg Finance L.P., iFAST CompilationsData as of 18 January 2022 |
ETF Spotlight: iShares Hang Seng Tech ETF
2022 is a politically important year for China. The Chinese Communist Party will host its 20th National Party Congress in November, to determine whether or not President Xi continues for another presidential term. In such a year, Chinese policymakers tend to prefer social and economic stability.
After focusing its policy on curbing financial risks and reducing debt in the economy in 2021, Beijing is starting to shift its focus towards supporting stable growth in the economy. This was emphasised during the recent annual Central Economic Work Conference, where Chinese leaders mapped out their priorities for 2022.
In contrast to the previous year, where the disorderly expansion of capital and tech companies was talked about, there was also less mention of the crackdown on large technology companies. This, coupled with the fact that most rectifications by internet companies have already been implemented, are signs that regulatory pressures are easing.
Given the steep selloff in Chinese tech stocks, we think that valuations are now too cheap to be ignored. Investors who are positive on the long-term growth prospects of this sector may use this opportunity to add to their positions. The iShares Hang Seng TECH ETF (HKEX:3067) is our preferred ETF for exposure to China’s technology sector.
