Electric vehicle manufacturer Tesla is one of the world’s most valuable companies, and many investors are wondering about the best way to get exposure to its success. Of course, the most straightforward way is to simply buy TSLA stock.
Meanwhile, investors who want a more diversified approach can choose between countless ETFs with Tesla stock. In this article, we’ll help you narrow down your search if you are looking for the best ETFs that hold Tesla.
The best ETFs with Tesla stock in 2024
Without further ado, let’s get started with our list of the best ETFs with Tesla stock. We made sure to feature a diverse range of ETFs that hold TSLA shares, providing options for investors with different risk appetites and outlooks on investing.
- iShares Core S&P 500 ETF (IVV) – The most conservative way to add some Tesla exposure to your portfolio
- Invesco QQQ Trust Series I – An ETF that tracks the tech-heavy Nasdaq-100 index
- Vanguard Consumer Discretionary ETF (VCR) – A consumer discretionary sector ETF with significant exposure to Tesla
- ARK Innovation ETF (ARKK) – Actively-managed fund investing in disruptive tech
- ALPS Clean Energy ETF (ACES) – An option for investors who value sustainability
- T-REX 2X Long Tesla Daily Target ETF (TSLT) – Leveraged ETF for Tesla bulls
1. iShares Core S&P 500 ETF (IVV) – The most conservative way to add some Tesla exposure to your portfolio
ETFs that track the S&P 500 index are the bread and butter of a long-term, passive investing style, providing highly diversified exposure to the largest companies in the United States. This of course also includes Tesla, which is the 10th largest company in the world by market capitalization as of January 2024.
While there’s countless S&P 500-based ETFs to choose from, we’re highlighting BlackRock’s iShares S&P 500 ETF, which is currently the world’s second largest ETF and has over $420 billion in total assets. The fund has an expense ratio of 0.03%, which is about as competitive as it gets.
At the time of writing this article, Tesla stock is IVV’s 11th largest holding, accounting for roughly 1.23% of the fund’s weight.
- Name and ticker: iShares Core S&P 500 ETF (IVV)
- Expense ratio: 0.03%
- AUM: $420 billion
- TSLA weight (Jan 2024): 1.23%
2. Invesco QQQ Trust Series I (QQQ) – An ETF that tracks the tech-heavy Nasdaq-100 index
The Invesco QQQ Trust Series I (QQQ) is the largest ETF that tracks the Nasdaq-100 index, which includes 101 of the largest companies listed on the Nasdaq stock exchange (excluding financial companies). This ETF has an expense ratio of 0.20%.
Compared to the S&P 500, the Nasdaq-100 index has a much larger representation of tech companies, and tends to be more volatile. Although the S&P 500 remains the top choice for long-term and passive investing, ETFs based on the Nasdaq-100 can also be a compelling long-term choice for investors with a positive outlook on the tech sector in the United States.
At the time of writing, Tesla is the 8th largest holding of the QQQ ETF, representing about 2.62% of the fund’s weight. Compared to investing in a S&P 500 ETF, products such as QQQ offer about twice as much exposure to Tesla.
- Name and ticker: Invesco QQQ Trust Series I (QQQ)
- Expense ratio: 0.20%
- AUM: $246 billion
- TSLA weight (Jan 2024): 2.62%
3. Vanguard Consumer Discretionary ETF (VCR) – A consumer discretionary sector ETF with significant exposure to Tesla
The consumer discretionary sector encompasses non-essential goods and services which people want, but don’t necessarily need. Companies operating in this sector tend to perform very well in strong economic conditions, but take a bigger hit when the economic landscape is challenging.
The Vanguard Consumer Discretionary ETF (VCR) is an ETF that tracks the MSCI US Investable Market Consumer Discretionary 25/50 Index. The VCR ETF has a competitive expense ratio of 0.10%.
At the time of writing, Tesla is the fund’s second largest holding, with a weight of 13.57%. This is quite a big step up in terms of exposure to Tesla compared to the more diversified products we have featured in this article so far. The VCR ETF’s biggest holding is Amazon, with a weight of 21.69%.
- Name and ticker: Vanguard Consumer Discretionary ETF (VCR)
- Expense ratio: 0.10%
- AUM (Jan 2024): $5.06 billion
- TSLA weight (Jan 2024): 13.57%
4. ARK Innovation ETF (ARKK) – Actively-managed fund investing in disruptive tech
The ARK Innovation ETF (ARKK) is a well-known actively-managed fund overseen by popular investor Cathie Wood. As the name suggests, ARKK has an investment theme of disruptive innovation, which ARK Invest defines as “the introduction of a technologically enabled new product or service that potentially changes the way the world works”.
The fund currently has an AUM of $7.6 billion, about 7.26% of which is represented by Tesla shares. At the time of writing, the fund’s largest holding is the Coinbase cryptocurrency exchange, with a weight of 8.64%.
As an actively-managed fund, ARKK has substantially higher fees than the ETFs we’ve featured in the article so far — the fund’s expense ratio is 0.75%. Combined with the fund’s strategy of investing in the more speculative side of the tech sector, ARKK is certainly not for everyone.
However, if you’re someone with a higher risk appetite and are looking to increase your exposure to tech, it’s an option worth considering.
- Name and ticker: ARK Innovation ETF (ARKK)
- Expense ratio: 0.75%
- AUM (Jan 2024): $7.6 billion
- TSLA weight (Jan 2024): 7.26%
5. ALPS Clean Energy ETF (ACES) – An option for investors who value sustainability
As an electric vehicle company, Tesla is often included in funds that aim to invest in sustainable tech and renewable energy. The ALPS Clean Energy ETF (ACES) tracks the CIBC Atlas Clean Energy Index (NACEX), and provides exposure to U.S. and Canadian company sin the clean energy sector.
The ACES fund has an expense ratio of 0.55% and an AUM of $240 million, which is considerably smaller than all of the other ETFs we’ve highlighted so far. Currently, Tesla represents 4.22% of the fund’s weight. The biggest holding of the ACES fund is Northland Power, with a weight of 6.07%.
- Name and ticker: ALPS Clean Energy ETF (ACES)
- Expense ratio: 0.55%
- AUM (Jan 2024): $240 million
- TSLA weight (Jan 2024): 4.22%
6. T-REX 2X Long Tesla Daily Target ETF (TSLT) – Leveraged ETF for Tesla bulls
T-REX 2X Long Tesla Daily Target (TSLT) is a leveraged ETF, making it a high-risk option for investors who are seeking 2:1 leveraged exposure to Tesla stock. More specifically, the fund aims to magnify TSLA’s daily performance by 200%.
Leveraged ETFs such as TSLT are not designed for long-term holding, and are best suited for short-term trades. In other words, even if you are highly bullish on Tesla’s prospects, you probably shouldn’t be buying a leveraged ETF unless you have a very specific short-term trading setup in mind.
The TSLT fund has a high expense ratio of 1.05%, but can actually be a less expensive way to get leveraged exposure to TSLA than many other options.
- Name and ticker: T-REX 2X Long Tesla Daily Target ETF (TSLT)
- Expense ratio: 1.05%
- AUM (Jan 2024): $137 million
The bottom line
As you can see, there is a broad range of ETFs that hold Tesla. Depending on the ETF, the exposure to TSLA can vary significantly, ranging from just over 1% to well over 10%. Ultimately, the choice will depend on how much risk you are willing to take on, and how much you value a highly diversified portfolio.
If you’re looking for more ways to explore ETFs, make sure to check out our article highlighting the best ETF screeners.
Source: https://coincodex.com/article/37222/best-etfs-with-tesla-stock/