From EVs to the metaverse, ETF managers name their hottest stock calls for 2022

Published Mon, Jan 10 202210:30 PM EST

Yasmin Rufo

Electric vehicles and the metaverse are hot topics right now, especially in the world of ETFs. CNBC asked two portfolio managers which stocks investors should be holding to capitalize on these trends and more. Tad Pak, who manages the Simplify Volt Robocar Disruption and Tech ( VCAR ) ETF, is extremely bullish on electric vehicle growth and says the sector's strong performance in the third-quarter is likely to continue into 2022. "Our ETF is focused on high conviction calls of disruptive companies which are set to dominate and revolutionize the electric vehicle industry," he told CNBC during a phone interview. Pak believes that Tesla , the fund's top holding at almost 20%, is a "winner takes all company" in the race for electrification. Unlike its competitors, Tesla's capacity to rewrite software to enable its cars to handle chips from many manufacturers has meant it has successfully weathered semiconductor shortages, he argued. Some 2.4% of the ETF's capital is allocated to both Lucid and Rivian , companies Pak views as potential rivals to Tesla provided they can overcome continuing chip shortages and supply chain issues. The fund, which was launched in Dec. 2020, is up over 30% over the last 6 months. In comparison, the S & P 500 index is 7% higher over the same period. Other names in the ETF include Nvidia , KUKAY and Vale . Inflationary pressures As inflation continues to rise at its fastest pace since 1982, James Davolos, portfolio manager of Horizon Kinetics' Inflation Beneficiaries ETF , discusses the stocks he believes will outperform in this inflationary environment. "Our fund seeks to invest in hard-asset but capital-light companies which will benefit from continued inflationary pressures and other long simmering trends such as the supply of commodities in the global economy," Davolos told CNBC in a phone interview. Davolos' top pick is Charles River Laboratories , which makes up 5.71% of the ETF and provides exposure to the healthcare industry, a typically strong inflationary hedge. "We believe this company has an addressable market ten times greater than it currently operates in and we forecast annual high single digit growth for many years to come," he added. Another favorite for Davolos is Texas Pacific Land Corporation , one of the largest landowners in Texas. The portfolio manager likes this company over other real estate players because "as they scale, have increasingly higher expenses which will be affected by inflation." In contrast, he said TPL has minimal SG & A (selling, general, and administrative expenses), due to its royalty-based business model. The fund, up 2.4% over the last 6 months, also holds the Australian Securities Exchange and Intercontinental Exchange . The origins of the metaverse Both ETF managers said they are monitoring the growth of the metaverse and the development of the blockchain ecosystem closely. "Although we find it hard to see the revenue model for metaverse companies, we continue to monitor how blockchain ecosystems will revolutionize business models and provide new opportunities," says Horizon Kinetics' Davolos. The Simplify VCAR ETF also has exposure to the metaverse via Meta Platforms as well as SNAP , and smaller players such as Roblox . "We hold some Facebook stock, but we are more interested in newer companies who will disrupt the augmented reality industry in the coming years as they provide better investment opportunities," fund manager Pak, who is also the founder and CEO of Volt Equity, said.

Tesla Inc. signage outside a dealership at the Easton Town Center shopping mall in Columbus, Ohio, U.S., on Friday, Dec. 10, 2021.

Luke Sharrett | Bloomberg | Getty Images