Best (and only) automotive ETF in the first quarter of 2022

The Auto Exchange Traded Fund (ETF) provides exposure to the performance of companies in the global automotive industry. The automotive industry includes companies that manufacture cars, trucks, vans, and commercial vehicles, as well as companies that supply auto parts. Well-known companies in the industry include Tesla (TSLA), Ford Motor Company (F), Toyota Motor Company (TM) and General Motors (GM), and are currently the world’s largest automaker by market capitalization.

Auto ETFs consist of a basket of auto stocks that enable investors to profit from the broader growth of the auto industry while avoiding the special risks associated with a single company.

Key points

  • In the past year, the performance of the auto industry has clearly outperformed the market.
  • The best (and only) auto exchange traded fund (ETF) is CARZ.
  • Its top three holdings are Tesla, General Motors and Daimler.

There is only one unique automotive ETF traded in the United States, excluding reverse and leveraged funds and funds with assets under management of less than US$50 million: First Trust NASDAQ Global Automotive Index Fund (CARZ). There is also a second ETF in this field: Simplify Volt RoboCar Disruption and Tech ETF (VCAR). However, the ETF was launched in December 2020, so it has not existed long enough to be judged based on InvestingClue’s indicators. At the time of writing, its assets under management (AUM) are also very low, making it a venture capital that aims to profit from niche autonomous driving technology trends, rather than providing exposure to the entire automotive industry.

The auto industry represented by the S&P 1500 auto industry index has clearly outperformed the market in the past year. The index provides a 1-year tracking total return of 62.2%, compared to 32.1% for the S&P 500. We noticed that the index only includes US companies, while CARZ focuses on the world, so it is not a perfect indicator. These performance data and all data below are as of November 11, 2021.

  • Performance over one year: 43.9%
  • Expense rate: 0.70%
  • Annual dividend yield: 0.73%
  • Three-month average daily volume: 16,132
  • Assets under management: US$77.4 million
  • Date of establishment: May 9, 2011
  • Issuer: First Trust

CARZ tracks the Nasdaq OMX Global Automotive Index, a modified market capitalization weighted index used to measure the performance of the largest and most liquid automakers. Companies in the index must have a global market value of at least 500 million U.S. dollars, be listed on eligible global stock exchanges, and have an average daily U.S. dollar trading volume of at least 1 million U.S. dollars for three months. The index’s approach means that larger companies will receive more weight, although an upper limit is set to prevent high concentration. First Trust Advisors announced on November 2, 2021 that CARZ will start tracking a new index at the end of January 2022, the S-Network Electric and Future Automotive Ecosystem Index.

Given its narrow focus on the highly cyclical automotive industry, CARZ may be less attractive in its buy-and-hold investment strategy. But it may help provide tactical exposure to the automotive industry in the short term. The fund follows a value-centric strategy, focusing on stocks that look relatively cheap compared to other industries. The following is a detailed introduction to CARZ’s 10 largest holdings.

First Trust NASDAQ Global Automotive Index Fund (CARZ) Top Ten Holdings
Company name (code) Percentage of CARZ assets company description
Tesla Inc (TSLA) 10.6% Electric car manufacturers and clean energy companies
General Motors Company (GM) 8.8% Manufacturers of cars, trucks and commercial vehicles
Daimler AG (DAI: ETR) 8.8% Manufacturers of cars, trucks and vans
Toyota Motor Corporation (7203: TKS) 7.4% Manufacturers of cars, trucks, minivans and commercial vehicles
Honda Motor Co., Ltd. (7267: TKS) 6.9% Manufacturers of cars, motorcycles and all-terrain vehicles
Ford Motor Company (F) 5.4% Manufacturers of cars, trucks and commercial vehicles
BYD Co., Ltd. Class H (1211: HKG) 4.1% Manufacturers of electric and hybrid cars and trucks
Bayerische Motoren Werke AG (BMW:ETR) 4.1% Manufacturers of luxury cars and motorcycles
Suzuki Motor Corporation (7269: TKS) 3.9% Manufacturers of cars, motorcycles and all-terrain vehicles
Nissan Motor Co., Ltd. (7201: TKS) 3.9% Car and truck manufacturers

The comments, opinions and analysis expressed here are for reference only and should not be regarded as personal investment advice or advice on investing in any securities or adopting any investment strategy. Although we believe that the information provided here is reliable, we do not guarantee its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Due to the rapidly changing market and economic conditions, all comments, opinions and analyses contained in our content are presented on the date of publication and may change without notice. This material is not intended to provide a complete analysis of every important fact about any country, region, market, industry, investment or strategy.

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