Earlier this year two exchange traded fund providers launched strategies that allow investors to concentrate on the global automotive industry.
Specifically, Global X launched Global X Auto (NYSEArca: VROM) and First Trust introduced First Trust Nasdaq Global Auto (NasdaqGM: CARZ) back in May of this year.
Broadly a sub-sector of the consumer discretionary equity sector, these ETFs invest in companies that are engaged in automobile manufacturing.
VROM is based on the S-Network Global Automotive Index while CARZ tracks the Nasdaq OMX Global Auto Index.
Top current holdings of CARZ are Honda Motor, Daimler AG, Toyota Motor, Hyundai Motor, and Ford Motor while VROM owns Toyota Motor, Daimler AG, Ford Motor, BMW, and Honda Motor rounding out the top five.
So there are some weighting and index construction nuances that separate the two funds from each other and that deserve consideration when doing the due diligence necessary to isolate which fund may be the potentially correct fit.
Since inception, both funds have dropped sharply in sympathy with the overall equity market sell off since May. In comparison to Consumer Discretionary Select Sector SPDR Fund (NYSEArca: XLY), which is down 10.86% since May, CARZ has lost 22.62% and VROM has lagged even more so, down 25.10%.
In fact, both funds are flirting with their lowest price levels since inception as the industry has suffered over the past few months. Perhaps these funds are worth a second look by those who may believe the subsector is undervalued and due for a rally, of course overall cooperation by the broad equity markets certainly would not hurt.
First Trust Nasdaq Global Auto
For more information on Street One ETF research and ETF trade execution/liquidity services, contact pweisbruch@streetonefinancial.com.