Riding the Electric Wave: Top ETFs for Investing in Tesla Stock

Jan. 27, 2025, 7:30 p.m. Business

Riding the Electric Wave: Top ETFs for Investing in Tesla Stock

Tesla, Inc. has been a major player in the electric vehicle (EV) market for several years, revolutionizing the industry with their innovative technologies and sustainable approach to transportation. As Tesla continues to grow and expand its reach, many investors are looking to capitalize on the company's success by investing in its stock. However, investing directly in individual stocks can be risky, especially when it comes to a high-growth, high-volatility stock like Tesla.

One way to mitigate this risk while still gaining exposure to Tesla's potential growth is by investing in Exchange-Traded Funds (ETFs) that hold Tesla stock. ETFs are investment funds that trade on stock exchanges and hold assets such as stocks, commodities, or bonds. By investing in an ETF that includes Tesla stock, investors can diversify their holdings and reduce the risk associated with investing in a single company.

Here are some of the top ETFs that offer exposure to Tesla stock, allowing investors to ride the electric wave of Tesla's success:

1. ARK Innovation ETF (ARKK)
The ARK Innovation ETF is managed by ARK Invest, a firm known for its focus on disruptive innovation. This ETF has a significant allocation to Tesla, making it a popular choice for investors looking to gain exposure to the company. ARKK holds a diverse portfolio of companies that are at the forefront of technological innovation, with Tesla playing a key role in the fund's performance.

2. iShares Self-Driving EV and Tech ETF (IDRV)
The iShares Self-Driving EV and Tech ETF is another option for investors seeking exposure to Tesla and the broader electric vehicle market. This ETF invests in companies that are involved in self-driving technology, electric vehicles, and related technologies. Tesla is a top holding in IDRV, making it a compelling choice for investors bullish on the future of the EV industry.

3. Global X Autonomous & Electric Vehicles ETF (DRIV)
The Global X Autonomous & Electric Vehicles ETF is designed to track the performance of companies involved in the production of autonomous vehicles, electric vehicles, and related technologies. Tesla is one of the largest holdings in DRIV, providing investors with exposure to the rapidly growing EV market. This ETF offers a diversified approach to investing in the future of transportation.

4. First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)
The First Trust NASDAQ Clean Edge Green Energy Index Fund focuses on companies involved in the clean energy sector, including renewable energy, energy storage, and electric vehicles. Tesla is a prominent holding in QCLN, reflecting the company's leadership in the sustainable energy industry. This ETF provides investors with exposure to Tesla's growth potential within the broader clean energy market.

5. Invesco WilderHill Clean Energy ETF (PBW)
The Invesco WilderHill Clean Energy ETF is a thematic ETF that focuses on companies involved in the clean energy industry, including solar, wind, and electric vehicles. Tesla is a top holding in PBW, making it a popular choice for investors seeking exposure to the clean energy transition. This ETF offers a unique opportunity to invest in Tesla within the context of the broader clean energy landscape.

Investing in ETFs that hold Tesla stock can be a strategic way to capitalize on the company's growth potential while diversifying your portfolio. By selecting ETFs with exposure to the electric vehicle market and related technologies, investors can participate in the ongoing transformation of the transportation industry. As Tesla continues to innovate and expand its market presence, investing in ETFs that include Tesla stock can offer a comprehensive approach to capturing the upside potential of this dynamic company.