May auto sales data, due out this week, could be just what the doctor ordered for Ford (NYSE: F) and General Motors (NYSE: GM) and that could be good news for the lone exchange traded fund dedicated to the auto industry.
“Estimated sales of 1.6 million new cars and trucks in May would make for a seasonally-adjusted annual rate of 17.4 million vehicles, according to Edmunds.com, a car buying platform,” reports Reuters.
Slack April sales data prompted some to say the First Trust NASDAQ Global Auto Index Fund (NasdaqGM: CARZ) was in focus for all the wrong reasons, but the alarmist tone misses the mark. CARZ is up 10.1% this year, better than quadruple the 2.4% gained by the S&P 500. There is more to the ETF’s story than just the giant U.S. automakers. [Cyclical Sector ETFs on the Rise]
Although CARZ is not a currency hedged ETF, factoring the more than 21% gained by the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) and the more than 16% gained by the Deutsche X-trackers MSCI Germany Hedged Equity Fund (NYSEArca: DBGR) into the CARZ equation is instructive because Japan and Germany combine for almost 55% of the auto ETF’s weight. Five Japanese automakers are found among the ETF’s top 10 holdings, two more than there are U.S. firms in that group.
Export-driven Germany, the Eurozone’s largest economy, has been highlighted as a prime beneficiary of the euro’s slide. 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 is supporting consumer confidence. [Catalysts for the Auto ETF]