DEFINITION of 'Auto Industry ETF'
An exchange-traded fund (ETF) that invests specifically in the automobile industry. An auto industry ETF tracks a benchmark index that consists of automobile manufacturers and ancillary suppliers to the industry.
Due to the limited number of automobile manufacturers in a single country, an automobile industry ETF would likely invest in stocks of both domestic and international manufacturers, depending on its mandate and investment objective.
BREAKING DOWN 'Auto Industry ETF'
By owning an ETF, you get the diversification of an index fund as well as the ability to sell short, buy on margin and purchase as little as one share. Another advantage is that the expense ratios for most ETFs are lower than those of the average mutual fund. When buying and selling ETFs, you have to pay the same commission to your broker that you'd pay on any regular order