“We believe industry earnings will soon decline,” the analyst told Bloomberg, forecasting a gradual dip in profitability for the U.S. auto industry. “Buying autos this late in the global economic cycle is arguably dangerous – precedents suggest the sector usually delivers most of its performance early in the cycle.”
U.S. automakers account for 23.5% of CARZ’s underlying weight, with top holdings including General Motors (NYSE: GM) 9.2% and Ford Motor (NYSE: F) 7.8%.
However, CARZ includes significant exposure to Japanese and European carmakers, which could benefit from greater export sales due to their weakening currencies against the U.S. dollar. CARZ includes a 37.4% tilt toward Japan, 23.6% in Europe and 8.1% South Korea.
First Trust NASDAQ Global Auto Index Fund
For more information on the auto industry, visit our automobiles category.
Max Chen contributed to this article.