Some of the benchmark indexes that investors can use to track the performance of the automotive sector are the Nasdaq OMX Global Auto Index, the S-Network Global Automotive Index, the MSCI ACWI Automobiles and Components Index, and the STOXX Europe 600 Automobiles & Parts index. Other useful benchmark indexes that are not solely focused on the automotive industry but that include a significant percentage of auto industry stocks are the S&P Consumer Discretionary Select Sector Index and the Dow Jones U.S. Consumer Goods Index.
Benchmark indexes are composed of a sampling of securities designed to represent the overall performance of a selected market sector. Benchmarks are a valuable tool for analysts and investors in assessing the health of various market sectors and also in evaluating the performance of an investment portfolio. Sector and Industry indexes can be compared to major market indexes, such as the S&P 500 Index, to see how well a segment of the market is performing compared to the market as a whole. Index returns provide good comparison points for investors to evaluate a specific portfolio, funds or individual stock selections.
- The automotive industry consists of companies such as car manufacturers, auto-parts makers and suppliers,
- Several index funds and sector ETFs exist to track this important economic sector.
- Key benchmarks with which to measure sector performance include those issued by Nasdaq OMX, MSCI, and STOXX.
- Due to the number of automotive companies within the U.S. and abroad, many of these indices can have a global reach as well.
The Nasdaq OMX Global Auto Index
The Nasdaq OMX Global Auto Index uses a specific market capitalization weighting methodology to more accurately mirror the performance of the largest and most widely traded automotive manufacturing firms. This benchmark is the basis for one of the major auto industry exchange-traded funds (ETFs), the First Trust Nasdaq Global Auto Index Fund.
The S-Network Global Automotive Index
The S-Network Global Automotive Index is a broader automotive sector index than the Nasdaq QMX. In addition to the major auto manufacturers, it includes an extensive selection of stocks of companies that manufacture and market auto parts or that provide auto-related services. Like the Nasdaq index, the S-Network Global Automotive Index is a modified market capitalization weighted index. The index is designed to include the 50 largest, most frequently traded global companies that derive at least 50% of their revenues from the automobile industry.
The MSCI ACWI Automobiles and Components Index
The MSCI ACWI Automobiles and Components Index is made up of a mix of mid- and large-cap stocks from 23 developed countries and 23 emerging market nations. All of the equities contained in the index are classified as being within the Automobiles and Components industry group within the larger consumer discretionary sector. The index includes Toyota, Ford, Daimler, and major auto parts suppliers Bridgestone and Johnson Controls.
The STOXX Europe 600 Automobiles & Parts Index
The STOXX Europe 600 Automobiles & Parts Index measures the performance of the major European automotive manufacturers and auto parts supply firms. It is an industry subset of the STOXX Europe 600 Index, which is composed of 600 of the largest and most widely traded stocks in 18 European countries. Tire manufacturers Pirelli and Michelin are significant elements of this index.