CARZ may not have a secret weapon, but it does have an under-appreciated trait that could help it endure near-term blips in auto demand: The weak yen. Sure, Ford (NYSE: F) and General Motors (NYSE: GM) are both top-10 holdings in the ETF and combine for almost 12% of the ETF’s weight, but Japan is almost 34.4% of the geographic weight in CARZ.
That is almost 1,500 basis points higher than the allocation to the U.S. Non-Japanese automakers such as Ford have not been shy about divulging their thoughts on the weak yen. South Korea has identified the falling Japanese currency as one of the two biggest risks to its economy. And Germany, the Eurozone’s largest economy and a major auto exporter, has also vocally criticized Japan’s currency policy. [Weak Yen Winners and Losers]
CARZ may not be a Japan ETF, but 10 of its 38 holdings are Japanese firms, highlighting the usefulness of CARZ as a weak yen play.
First Trust NASDAQ Global Auto Index Fund
