This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Auto ETF Fills Niche

Stocks in this article: CARZ IYK F JCI GM FSAVX

NEW YORK ( TheStreet) -- he ETF universe now boasts over 1000 individual products, according to the April fund flow data compiled by the National Stock Exchange.

The industry's rapid growth and expansion has resulted in the creation of products designed to tap into vast corners of the marketplace. Despite this wide selection, there are still areas that have remained largely untouched by ETFs.

The automobile industry has traditionally been one such region. Despite the fact that the car industry's resurgence has been one of the major success stories in the global economic revival, there is no pure play ETF option available, leaving auto enthusiasts to struggle to capture the strength of car makers and parts suppliers.

This week, First Trust stepped in to fill that niche. With Tuesday's launch of the First Trust NASDAQ Global Auto Index Fund (CARZ), the Illinois-based company has filled this longstanding gap, becoming the first ETF sponsor to provide investors with a pure way to target the global auto manufacturing industry.

CARZ is designed to track a basket of reputable car makers in the United States and rest of the globe. The fund's 30 holdings present as a who's who of the car industry, with Daimler, Ford (F), General Motors (GM), Honda (HMC) and Toyota (TM) comprising the top five positions. Together, these and the rest of CARZ's top 10 holdings represent close to 60% of its assets.

It is important to note that this fund's index is dominated by manufacturers. Popular auto parts suppliers such as Johnson Controls (JCI) and BorgWarner (BWA) cannot be found in the fund's index.

The introduction of CARZ is exciting news for the ETF industry. However, during the fund's opening days of trading, it will be best for conservative investors to hold off on diving in. Like other brand new products, this fund will likely take time to gather steam and will be vulnerable to liquidity-related issues in the interim.

Until the fund finds a stable following, there are well-weathered alternatives investors can turn to in order to satisfy demand for automotive exposure.

In the past, with no way to gain concentrated exposure to this sector, I had often urged car-hungry ETF investors to turn to alternative options that boast notable auto exposure. For instance, with over 10% of their respective portfolios dedicated to automotive retailers, funds including the iShares Dow Jones Consumer Goods Index Fund (IYK) and the SPDR S&P Retail ETF (XRT) help to satisfy some demand.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs