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3 ETFs For Tesla's S&P 500 Addition

It was a long, often controversial road for Elon Musk's company, but Tesla Inc (NASDAQ: TSLA) is finally getting the long-coveted approval to join the S&P 500.

· 11/17/2020 09:20

It was a long, often controversial road for Elon Musk's company, but Tesla Inc (NASDAQ:TSLA) is finally getting the long-coveted approval to join the S&P 500.

The often clandestine committee behind the benchmark U.S. equity gauge said Monday the electric vehicle maker will join the index prior to the start of trading on Monday, Dec. 21.

“Due to the large size of the addition, S&P Dow Jones Indices is seeking feedback through a consultation to the investment community to determine if Tesla should be added all at once on the rebalance effective date or in two separate tranches ending on the rebalance effective date,” according to to S&P Dow Jones Indices.

It's clear that Tesla will enter if the S&P 500 at a level of some importance. With a market value of $389.92 billion as of the Nov. 16 close, Tesla would be in the 11th spot, just behind Johnson & Johnson (NYSE:JNJ).

Of course, Tesla joining the S&P 500 is important because fund managers that benchmark to that index will have to buy the stock, which could be impactful for some of the following exchange-traded funds.

SPDR NYSE Technology ETF (XNTK)

The oft-overlooked SPDR NYSE Technology ETF (NYSE:XNTK) is one of the more unique technology ETFs investors will come across and although it doesn't garner much in the way of headlines, it's got more than $535 million in assets under management.

XNTK is up 52.61% year-to-date, an impressive performance, much of which is attributable to Tesla because the electric vehicle maker accounts for 10.4% of the fund's portfolio. That's more than double the weight assigned to XNTK's second-largest holding.

More than 150 ETFs have Tesla exposure, but XNTK is one of just a few with a double-digit weight to the stock.

ARK Autonomous Technology & Robotics ETF (ARKQ)

Three of ARK Investment Management's sizzling actively managed ETFs sport Tesla exposure, but the ARK Autonomous Technology & Robotics ETF (NYSEA:ARKQ) is the one that currently has the largest weight to that stock at 9.87%. Tesla is the largest ARKQ holding by 320 basis points.

Tesla's heft in this ETF is sensible because the fund emphasizes autonomous transportation and energy storage, among other disruptive pursuits. The benefits of that Tesla weight are obvious as ARKQ is up 71.32% year-to-date.

ARK Innovation ETF (ARKK)

The ARK Innovation ETF (NYSE:ARKK) is now a legend as it's the largest equity-based actively managed ETF. One reason investors are flocking to the fund is its status as the original active ETF to feature a prominent weight to Tesla.

These days, the stock accounts for 9.13% of ARKK's weight, down from the highs that, at various points, stretched well into double digits. That's alright because ARKK maintains one of the largest Tesla weights among all ETFs and is positioned to benefit amid S&P 500-related buying of the stock.