How To Own Tesla While Reducing Your Overall Risk

Shares of electric car maker Tesla Inc. (TSLA) are down nearly 50% since December of 2018. That is quite a fall and one that attracts the attention of investors looking to buy a stock after it has shed a large amount of its value in the hopes that the stock price will rebound in the future.

We have seen Tesla’s stock crash before and bounce back even higher. This gives hopes that the company can turn things around and the stock will once again see the $300 handle. Regardless though of what the stock has done in the past, anyone considering investing in Tesla today should be cautious and try to limit their risk as much as possible.

One way of doing this is by simply buying an Exchange Traded Fund, which has a position in Tesla. That way if the stock continues to crash and eventually burns, your investment doesn’t take as much of a hit as if it would if you directly purchase shares of Tesla. On the flip side, if Elon Musk stabilizes the company and investors begin to believe his story, causing Tesla to climb higher, you reap the rewards, and the ETF will also move higher. While the move higher in an ETF may not be as substantial, it would still increase in value if it held a large portion of the auto-maker.

With that in mind, let us take a look at a few different ETFs that hold varying sizes of Tesla in their portfolio’s.

The first ETF is the ARK Innovation ETF (ARKK), which has Tesla as its top holding. Tesla represents 9.96% of the fund’s assets. The fund has 38 different positions, which are companies that focus on disruptive and innovative firms. Despite Tesla’s poor recent performance, the fund is still up 11.64% and down just a half of a percent over the last 12 months. ARKK would see a massive move upwards if Tesla regained the value it has lost, but due to its exposure to the electric car company, if Tesla does continue to decline, ARKK will certainly take a substantial hit. Continue reading "How To Own Tesla While Reducing Your Overall Risk"