Automotive exchange-traded funds (ETFs) provide exposure to the performance of companies within the global automobile industry. The auto industry includes companies that manufacture cars, trucks, vans, and commercial vehicles. It also includes companies that supply automobile parts. Well-known names in the industry include Tesla Inc. (TSLA), now the world's largest automaker by market value, and also Ford Motor Co. (F), Toyota Motor Corp. (TM), and General Motors Co. (GM). Auto ETFs are comprised of a basket of automobile equities, enabling investors to profit from the broader growth of the auto industry while avoiding the idiosyncratic risk associated with a single company.
- The auto industry outperformed the broader market over the past year.
- The best (and only) auto ETF is CARZ.
- Its top three holdings are Daimler, Toyota, and Volkswagen.
There is only one distinct auto ETF that trades in the U.S. The auto industry, as measured by the Nasdaq OMX Global Automobile Index, has outperformed the broader market with a total return of 24.7% over the past 12 months compared to the S&P 500's total return of 12.0%, as of November 3, 2020. The best-performing (and only) auto ETF for Q1 2021 is the First Trust NASDAQ Global Auto Index Fund (CARZ). We examine this fund below. All numbers below are as of November 4, 2020.
ETFs with very low assets under management (AUM), less than $50 million, usually have lower liquidity than larger ETFs. This can result in higher trading costs which can negate some of your investment gains or increase your losses.
- Performance over 1-Year: 23.6%
- Expense Ratio: 0.70%
- Annual Dividend Yield: 1.11%
- 3-Month Average Daily Volume: 11,298
- Assets Under Management: $32.6 million
- Inception Date: May 9, 2011
- Issuer: First Trust
CARZ tracks the Nasdaq OMX Global Auto Index, a modified market-capitalization weighted index that gauges the performance of the largest and most liquid automobile manufacturers. The ETF provides exposure to large-cap equities in the global auto industry. Given its narrow focus on the highly cyclical auto industry, CARZ is likely to have less appeal within a long-term, buy-and-hold investment strategy. But it may be useful for providing tactical exposure to the auto industry over the short term. The fund follows a value-centric strategy, focusing on what are known as value stocks, which are stocks that look relatively cheap compared to the rest of the sector. Below is a closer look at the ETF's 10 largest holdings.
|First Trust NASDAQ Global Auto Index Fund (CARZ) Top 10 Holdings|
|Company Name (Ticker)||Percent of CARZ Assets||Description of Company|
|Daimler AG (DAI:DAX)||8.5%||Manufacturer of cars, trucks, and vans|
|Toyota Motor Corp. (7203:TYO)||8.2%||Manufacturer of cars, trucks, minivans, and commercial vehicles|
|Volkswagen AG (VOW3:DAX)||7.9%||Manufacturer of passenger cars and light commercial vehicles|
|Honda Motor Co. Ltd. (7267:TYO)||7.3%||Manufacturer of automobiles, motorcycles, and all-terrain vehicles|
|Tesla Inc. (TSLA)||6.8%||Electric vehicle manufacturer and clean energy company|
|Kia Motors Corp. (000270:KSC)||4.4%||Manufacturer of passenger cars, mini-buses, trucks, commercial vehicles, and auto parts|
|Byd Co. Ltd. (1211:HKG)||4.4%||Manufacturer of passenger cars, commercial vehicles, and other automotive products|
|Hyundai Motor Co. (005380:KSC)||4.2%||Manufacturer of motor vehicles and related parts|
|Suzuki Motor Corp. (7269:TYO)||4.1%||Manufacturer of motorcycles, passenger cars, and commercial vehicles|
|Bayerische Motoren Werke AG (BMW:DAX)||4.1%||Manufacturer of cars, off-road vehicles, and motorcycles|