By Todd Shriber New York, February 15 (TradersHuddle.com) - Most Wall Street history buffs know that once upon a time Ford (NYSE: F) and General Motors (NYSE: GM) were members of the Dow Jones Industrial Average. And almost anyone that has taken a high school history class knows the profound impact the auto industry has had on the American business landscape. Companies like Ford and GM have weathered competition from foreign rivals and to this day remain an important part of gauging just how well the U.S. economy is performing.

For those reasons, the fact that until last year there was no exchange-traded product focusing on the auto industry was kind of odd. That changed in mid-2011 when in the span of just a few weeks, not one, but two ETFs offering exposure to automakers and parts producers debuted. The newer of the two funds was the Global X Auto ETF (NYSE: VROM).

Home to 50 stocks, VROM represents a fine way for investors to tap into the global nature of the automotive business. After all, Ford and GM aren't the only big boys on the automotive block. VROM's roster is in fact the who's who of the global automotive industry. Top-10 holdings include Toyota (NYSE: TM), Ford, Daimler AG, Hyundai, Honda (NYSE: HMC) and BMW along with parts suppliers such as Johnson Controls (NYSE: JCI).

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At the country level, VROM can rival plenty of multi-country ETFs on the market today as the fund offers exposure to companies based in 11 different nations. Having exposure to 11 different countries is a noteworthy feather in VROM's cap, but investors should note Japan, the U.S. and Germany, in that order, account for almost two-thirds of the ETF's total country allocation. South Korea at 12.5% is the only other country to receive a double-digit allocation in VROM.

Of course, VROM's primary utility lies in gauging the strength of consumers and their willingness to purchase or lease new and used vehicles. VROM has a staples automotive feel to it with companies like Ford, General Motors and Hyundai among its fray, but with Daimler, parent of Mercedes Benz, BMW and Porsche in the cards as well, VROM can also be used as a barometer for just how much folks are willing to spend on those new cars.

There are key fundamental factors to acknowledge here. First, automakers tend to perform well when the U.S. economy is showing signs of life as it is right now. Second, there is no denying auto demand in emerging markets such as China and India is soaring. And those people want American, German and Japanese cars. Should those factors not only remain in place but flourish in 2012, then thinly-traded VROM could turn out to be one of the more pleasant surprises among sector ETFs this year.


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