Nippon Life India Asset Management Ltd has applied for an open-ended scheme that will look to replicate or track S&P Kensho Electric Vehicles Index, which is designed to measure the performance of companies involved in the electric vehicle sector and the ecosystem supporting it.

S&P Kensho Electric Vehicles Index was launched on 17 September 2018 and delivered an annualized return of about 40% over the past three years.

The index intends to represent companies that are focused on producing electric road vehicles and associated subsystems, powertrains, energy storage systems, clean fuel technology (such as hydrogen fuel cells) and charging infrastructure.

Out of the 44 companies in S&P Kensho Electric Vehicles Index, the top five constituents are Aspen Aerogels Inc (6.37%), Li Auto Inc (3.75%), XPeng Inc (3.45%), Fisker Inc (3.22%) and Tesla Inc (3%).

From India, only Tata Motors Ltd forms part of the index.

Country-wise, the US has the biggest weightage at 30%, followed by China at 5%, Canada at 3% and Japan at 2%.

Indians have started focusing on electric vehicles as an investment theme over the past year with many investors looking at US-based electric-car maker Tesla Inc.

Even mutual funds have started to focus on this theme. Before Nippon India, two asset management companies had filed for funds based on EV theme.

Sachin Bansal-backed Navi AMC Ltd had last month filed draft papers for a fund of fund (FoF) based on electric vehicles and driving technology.

Navi Electric Vehicles and Driving Technology FoF will look to invest in units of overseas exchange-traded funds (ETF) and/or index funds based on STOXX Global Electric Vehicles & Driving Technology NET Index.

There are 90 constituents in the index, including Tesla Inc, NVIDIA Corp and Toyota Motor Corp.

Earlier this month, Mirae Asset Mutual Fund had applied for Mirae Asset Electric & Autonomous Vehicles ETFs FoF that will invest in overseas equity ETFs, which are based on companies involved in the development of electric and autonomous vehicles and related technology, components and materials. The scheme will be benchmarked to Solactive Autonomous & Electric Vehicles Index.

Investors should note these theme-based schemes carry very high investment risks.