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Must-know: Top auto industry ETFs for investors

Henry Kallstrom - Author
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Nov. 20 2020, Updated 10:46 a.m. ET

Auto industry ETFs

The First Trust NASDAQ Global Auto ETF (CARZ) is the most traded auto-focused ETF. It’s a market cap-weighted index. Only automobile companies with more than a $500 million market cap are included in the index.

 

The above chart shows the companies in CARZ.

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Returns

The three-year return for the ETF is 48.32%. Year-to-date, or YTD, CARZ provided a return of 2.23%. The fund also has significant holdings of Japanese automakers Toyota (TM) and Honda (HMC).

Global automotive companies have a presence in Consumer Discretionary Equities category ETFs. If you’re looking to get exposure to consumer discretionary stocks with holdings of leading auto companies, there are a lot of options.

The highly liquid Dow Jones U.S. Consumer Goods Index Fund (IYK) has Ford (F) and General Motors (GM) in its top ten holdings at 2.84% and 2.24%, respectively. Similarly, index funds like the Consumer Discretionary Select Sector SPDR Fund (XLY) and the Vanguard Consumer Discretionary Fund (VCR) have holdings of major automakers, auto suppliers, and dealers.

It’s recommended to invest through ETFs to minimize the concentration risk associated with investing in a single or a few companies. The ETFs mentioned above can be used to get exposure to global automakers.

For the latest updates, visit Market Realist’s Autos page.

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