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  • Fund watch
  • artificial intelligence
  • autonomous vehicles
  • electric vehicles
  • semiconductors

Which ETF is delivering gains on the back of smart mobility growth?

The S&P Kensho Smart Mobility ETF has risen by 13.7% so far this year. While holdings including Nvidia and Vontier are enjoying stellar growth in 2023, the fund’s performance has been more modest. However, the smart mobility theme is predicted to top $259bn by 2026.

  • S&P Kensho Smart Mobility ETF up 13.7% this year, following sharp falls in 2022.
  • Top holding Nvidia revs up 192% year-to-date as AI flourishes.
  • Smart mobility market value predicted to reach $259bn by 2026.

The S&P Kensho Smart Mobility ETF [HAIL] has risen 13.7% year-to-date and 2.8% in the past week.

The fund was founded in 2017 and tracks the S&P Kensho Smart Transportation Index, which offers exposure to key players in the smart transportation segment: companies involved in the technology behind autonomous and connected vehicles; drones for both commercial and civilian applications; and advanced transport systems.

Smart transportation is rapidly expanding as companies and consumers look to green solutions and new technologies like electric vehicles (EVs) and self-driving cars. At present, the Kensho Smart Mobility ETF has a relatively broad remit: as of 15 June, automobile manufacturers account for a 19.38% weighting in the fund, followed by semiconductors (16.60%), automotive parts and equipment (13.91%), passenger ground transportation (98.45%) and electronic equipment (7.60%).

Areas with smaller allocations include aerospace, defence and cargo ground transportation, among others. Geographically, the US represents a majority 80.52% stake, followed by Hong Kong, Japan and China, with 5.15%, 4.07% and 2.85%, respectively.

Top holdings Nvidia and Vontier leap upwards

The HAIL fund’s top holding, Nvidia [NVDA], makes up 2.63% of the portfolio value as of 15 June. The NVDA share price has skyrocketed 192.2% year-to-date to 16 June, with artificial intelligence (AI) technology driving demand for its graphics processing units. In May, Nvidia became the first chip stock to top a $1trn market cap, albeit briefly.

Some experts believe the Nvidia share price is overheated. Long-term investor Edmond de Rothschild Asset Management recently reduced its bets on the company as an overweight prospect, according to Bloomberg. Global chief investment officer Benjamin Melman said its position on Nvidia is now “far smaller”.

The second-largest holding in the HAIL fund is global industrial technology firm Vontier [VNT], with a 2.50% weighting as of 15 June. Vontier owns brands including Teletrac Navman, which offers software solutions for GPS fleet tracking. On 6 June, Vontier announced Shell [SHEL.L] has selected it to implement its iNFX payment system across 13,000 service stations through the end of next year.

In February Vontier announced positive first quarter 2023 results, with sales of $776m up 4% year-over-year. Vontier stock has risen 63.4% year-to-date, and is flat over the past week.

Theme outlook positive overall

Despite stellar performances from Nvidia and Vontier, their relatively small weightings in HAIL have translated to limited impact on overall performance.

Like many tech-focused stocks and funds, HAIL has shed more than half its value since its all-time high in 2021. With lending rates at sustained high levels, the brakes could remain on the smart mobility theme as investors continue to shy away from riskier assets.

However, according to a report by Expert Market Research, the smart mobility market is projected to reach $259.3bn by 2026, jumping from $100.2bn in 2020, and is expected to grow at a CAGR of 17.18% from 2023–2028. This could indicate further gains for the S&P Kensho Smart Mobility ETF as well.

According to the TipRanks, based on ratings from 646 Wall Street analysts, the consensus is currently to ‘hold’ on the ETF. By contrast, the average 12-month target price of $42.80 would represent a 28.3% increase from the fund’s latest close of $33.36 on 16 June.

Disclaimer Past performance is not a reliable indicator of future results.

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