Auto ETF in Focus as Car Sales Rebound - ETF News And Commentary
09 Setembro 2013 - 9:03AM
Zacks
2013 has been a year filled with interesting stories and a lot of
surprises. For a while, markets remained range bound as investors
around the globe were analyzing every bit of economic or Fed
related news for clues regarding ‘tapering’ of the QE program.
August in particular was a rough month for global equities as
concerns over higher rates and geopolitical worries kept stocks in
check across the board. Under such harsh conditions the auto
industry was one of the few which not only survived but also
performed pretty well.
Auto Sector in Focus
For a while the U.S. automotive industry seemed to be floundering
with a few analysts forecasting a grim outlook for the sector.
However, in recent months, the industry witnessed the highest
monthly sales levels since the recession began.
The auto sector posted a stellar performance in August this year.
For the first time in 6 years, auto sales shimmered, while
according to Bloomberg, the 17% surge in U.S. auto sales in August
helped push the annual rate to a pre-recession, boom-time
level.
About 1.5 million new cars were sold in August and all the leading
auto giants, namely, Ford, Nissan, General Motors, Toyota, and
Honda, gained in double digits last month (read: Behind the Surge
in the Auto ETF).
Factors Driving Sales
An improving economy, low car loan interest rates, reduced gas
prices and high trade in values jointly acted in favor of the U.S.
auto sector, pushing sales higher. Plus, many consumers had been
waiting on a new car, and with the solid economy, some felt that it
is now time to upgrade their vehicle (Read: 3 Cyclical ETFs for an
Improving Economy).
How to Benefit?
Given the ongoing boom and the continued optimism in the auto
industry, investors should focus on the only pure play ETF in the
space for a broad exposure – the
First Trust NASDAQ
Global Auto ETF (
CARZ) – that tracks the
NASDAQ OMX Global Auto Index.
CARZ so far has been under-appreciated by many investors as
indicated by its AUM of only $36.3 million and average daily
trading volume of just under 24,000 shares.
The product holds 38 large-cap securities in its basket. The
product is more tilted towards its top 10 holdings which combine to
make up roughly 60% of the ETF's assets. Amongst individual
holdings, Daimler AG, Ford Motors and Toyota Motors take the top 3
spots.
Top country holdings of the fund include Japan 32.64%, Germany
23.08% and U.S. 21.19%.
The product has yielded impressive returns of 42% as of Jun 30 on
an annual basis, while year-to-date returns are nearly 26%. The
fund gives a decent yield of 0.86% a year.
Currently, the product is trading above its 50-Day Moving Average
of $36.55. The 52-week price performance of the fund is up by 54%
(Find all Consumer Discretionary ETFs).
CARZ currently has a Zacks Rank of #2 or ‘Buy’ with a high risk
outlook.
The Bottom Line
Investors should note that the auto sector is highly concentrated
as the top 10 global automakers account for roughly 80% of the
worldwide production and nearly 90% of total vehicles sold in the
U.S., so there is definitely going to be some company specific risk
in this product.
But given the promising trends for cyclical stocks at this time,
some investors may want to consider buying into this automotive ETF
in the long as well as for the short term. With the U.S. economy
slowly rebounding, we could see further gains in the automotive
space making this a potentially good time to get into this surging
sector, especially after the recent bout of solid data.
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FT-NDQ GL AUTO (CARZ): ETF Research Reports
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
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