Amidst its stock’s 65% drop last year, Tesla has fallen out of the top 10 holdings of a $1.3 billion South Korean electric vehicle mutual fund for the first time.
Korea Investment Management Co. noted that it had reduced its exposure to Tesla to less than 2% of its electric-vehicle mutual fund’s net asset value. This was done partly as a way to reduce volatility. It should be noted that Tesla had comprised as much as 9% of the fund in the past.
Hwang Woo-taek, lead manager of the EV fund, informed Bloomberg News that the firm believed several external and internal elements were not favorable with Tesla. Some of these elements included rival electric cars that may compete with Tesla, as well as CEO Elon Musk’s TSLA stock sales that were used to fund his acquisition of Twitter.
“We thought many external and internal elements were not favorable,” Hwang said.
But while the fund still supports Tesla, Hwang noted that “we need something else to justify its valuations.” The lead manager also noted that Tesla should prove it can meet expectations, especially with regard to its new vehicles like the Cybertruck and its plans to produce 4680 battery cells in-house.
Amidst its decision to trim its Tesla holdings, the EV fund has placed its bet on stocks that are related to EV charging services such as Eaton Corp. and ABB Ltd. The lead manager also noted that he is still bullish on EV battery stocks.
The South Korean EV fund has actually performed very well against its peers. Over the past three years, it has beaten 98% of its rivals, thanks in no small part to Tesla and its meteoric rise during the pandemic. As Tesla dropped 65% and amid weak sentiments in the EV industry as a whole last year, the firm recorded its worst-ever performance in 2022.
Disclosure: I am long TSLA.
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