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The Best Auto ETF for Q3 2022

CARZ is the best auto ETF for Q3 2022

The auto industry includes companies that manufacture cars, trucks, vans, and commercial vehicles, as well as companies that supply automobile parts and technology. Well-known names in the industry include Tesla Inc. (TSLA), now the world’s largest automaker by market value, Ford Motor Co. (F), Toyota Motor Corp. (TM), and General Motors Co. (GM).

Investors looking to invest in a specific industry can typically do so by using an exchange-traded fund (ETF) focused on that area. An ETF allows investors to hold a basket of stocks operating within a specific industry, thus avoiding the idiosyncratic risk of investing in a single stock.

But that's no longer the case when it comes to autos. As of this year, there is no pure-play ETF specifically devoted to the auto industry. That's because the closest thing to a pure-play auto ETF recently changed its investment objective and is now less focused on the industry.

Key Takeaways

  • The auto industry outperformed the broader market over the past year.
  • The closest thing to an auto exchange-traded fund (ETF) is CARZ.
  • Its top three holdings are Texas Instruments Inc., Qualcomm Inc., and Advanced Micro Devices Inc.

In January of 2022, the previously named First Trust NASDAQ Global Auto Index Fund changed its investment objective to focus on companies primarily involved in three areas: the development and sales of electric and autonomous vehicles, future auto technologies and products, and related technologies. It also changed the index that it tracks and is now called the First Trust S-Network Future Vehicles & Technology ETF (CARZ). It is the closest thing to an auto ETF that trades in the U.S., excluding inverse and leveraged funds as well as those with less than $50 million in assets under management (AUM).

The automobile industry, as represented by the benchmark S&P 500 Automobiles Industry Index, has outperformed the broader market in the past year. The index has provided a one-year trailing total return of 6.4%, compared with -1.9% for the S&P 500. We note that this index includes only U.S. companies, while CARZ has a global focus. As mentioned, CARZ now is also less focused exclusively on the auto industry than it was. The performance figures above and all data below are as of May 26, 2022.

First Trust S-Network Future Vehicles & Technology ETF (CARZ)

  • Performance over one-year: -11.6%
  • Expense ratio: 0.70%
  • Annual dividend yield: 0.72%
  • Three-month average daily volume: 8,344
  • AUM: $58.6 million
  • Inception fate: May 9, 2011
  • Issuer: First Trust

CARZ tracks the S-Network Electric & Future Vehicle Ecosystem Index, which targets companies operating in the electric and future vehicle ecosystem. That includes companies involved in manufacturing electric and autonomous vehicles or providing enabling technologies and materials for the manufacturing process. It also includes companies developing and manufacturing future automotive technology and products or companies providing information technology solutions. The ETF normally invests at least 90% of its assets in the equities that comprise the index. The majority of the fund's holdings are based in the U.S., with the remainder represented by a number of other developed and emerging markets, including South Korea, Japan, and China. More than half of the fund's holdings are represented by the information technology sector with another significant chunk devoted to the consumer discretionary sector. The fund follows a value-centric strategy, focusing on stocks that look relatively cheap compared to others in the same sector. Below is a closer look at CARZ’s 10 largest holdings. Investors should note that only one of these 10 holdings is an automobile manufacturer.

First Trust NASDAQ Global Auto Index Fund (CARZ) Top 10 Holdings
Company Name (Ticker) Percent of CARZ Assets Description of Company
Texas Instruments Inc. (TXN) 4.8% Semiconductor design and manufacturing
Qualcomm Inc. (QCOM) 4.7% Semiconductor and telecommunications equipment
Advanced Micro Devices Inc. (AMD) 4.7% Semiconductor products and devices
Samsung Electronics Co. Ltd. (005930:KRX) 4.6% Consumer electronics, communications, and related services
Toyota Motor Corp. (7203:TKS) 4.6% Manufacturer of cars, trucks, minivans, and commercial vehicles
Intel Corp. (INTC) 4.5% Multinational technology company
Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM) 4.4% Semiconductor manufacturer
Microsoft Corp. (MSFT) 4.3% Software, cloud computing, and video games
Apple Inc. (AAPL) 4.1% Consumer electronics, software, and online services
Alphabet Inc. Class A (GOOGL) 3.9% Multinational technology conglomerate

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

Article Sources
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  1. Business Wire. "First Trust NASDAQ Global Auto Index Fund Announces Timing of Changes to Investment Objective and Fund Name."

  2. VettaFi. "ETF Screener."

  3. YCharts. “Financial Data.”

  4. First Trust. "First Trust S-Network Future Vehicles & Technology ETF (CARZ)."

  5. VettaFi. “First Trust S-Network Future Vehicles & Technology ETF (CARZ).”

  6. First Trust. “First Trust S-Network Future Vehicles & Technology ETF (CARZ)."

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