The auto industry is enjoying improved fundamentals from an expanding economy. Easy car loans have been aiding growth in car sales, low interest rates have cut financing costs for all buyers and the rising employment rate, with employers adding new workers last year at the fastest pace since 1999, is supporting consumer confidence.
All of that is good news for the often-overlooked First Trust NASDAQ Global Auto Index Fund (NasdaqGM: CARZ), which is the lone dedicated auto industry exchange traded fund, is up 8.5% year-to-date and nearly all of those gains have been accrued in February. [Auto ETF Gains Momentum]
“February is expected to mark the 12th consecutive month of year-over-year gains for the industry. Analysts said sales have been minimally affected by rising gasoline prices and a work stoppage at West Coast ports that could reduce March inventories of some vehicles imported from Asia,” reports Nick Bunkley for Automotive News.
The February sales data, which includes sales on March 1 and March 2, will be reported on March 3. It is possible that U.S. auto sales could hit 15 million units this year, meaning this could be the best auto sales year since 2001.
The $32.4 million, which celebrates its fourth anniversary in May, is not a currency hedged ETF, but there is no doubt the fund is benefiting from weaker currencies in some of its largest country allocations. For example, is the largest country weight in CARZ at 35.7%, or 1,240 basis points larger than the ETF’s allocation to U.S. automakers.