NEW YORK (TheStreet) -- After an October for the record books, the markets kicked off November on a choppy note. Approaching the end of the year, investor fears have been rekindled, with the European crisis making its way back into the headlines.
While the sour start to the month may be enough to drive some investors back towards safe havens, I encourage investors to avoid shunning the markets entirely.
The ongoing saga involving Greece, Spain, Italy, Germany, and other members of the euro monetary bloc will continue as we move ahead. As we have seen, however, in regions outside of the EU, hints of strength are shining through.
The automotive industry is an example of one sector that has managed to stay buoyed even in the face of mounting macroeconomic headwinds. This past week investors were greeted to strong news on this front; in October, U.S. sales of new vehicles rose to the highest levels since February
According to a report from
, some of the strongest performers last month included Volkswagen, Chrysler, and Nissan. Sales from
rose 6%, falling in line with expectations.
The past month's strong car and truck sales numbers indicate hardiness across global auto manufactures. In addition, it highlights the impressive resilience of the consumer. Even in the face of high unemployment and a seemingly endless deluge of negative news, individuals remain willing to spend on these large purchases.
Looking ahead, the auto industry may be a region of interest among those looking to target pockets of market strength. Unfortunately for ETF investors, gaining exclusive access to companies like Ford,
has been notoriously difficult.
In 2011, two fund companies have stepped up to the plate to unveil ETFs designed to allow investors to target the auto industry. However, in their opening months of trading, neither the
Global X Automotive ETF
First Trust NASDAQ Global Auto Index Fund
have managed to gather the type of following necessary to be considered adequately liquid. As of the start of November, both funds have failed to see their average daily trading volume breach the 2,000 mark.
In the absence of an appropriate pure play option, auto hungry ETF investors have been focused to direct their attention towards proxy products.
With over 12% of its portfolio dedicated to companies related to the automotive industry, a fund like the
SPDR S&P Retail ETF
may be appealing. Rather than targeting car markets, XRT's auto exposure is spread across retailers including
Group 1 Automotive
iShares Dow Jones U.S. Consumer Goods Index Fund
is another product to consider. The 9% slice of IYK dedicated to the auto industry includes both automotive retailers and car manufacturers.
Precious metals may not be the most obvious choice for investors looking for exposure to the car industry, but funds like the
ETFS Physical Palladium Shares
ETFS Physical Platinum Shares
are two additional funds auto bulls may want to keep in mind. These two shiny metals are used extensively in the production of catalytic converters, and will therefore be in a position to benefit as vehicles continue to roll off the lots.
Ultimately, however, the best way for investors to gain comprehensive exposure to the recovering global auto industry at this time is not through ETFs, but rather using a mutual fund. In an attempt to provide investors with one stop shop exposure to this sector, Michael Weaver, the portfolio manager behind the
Fidelity Select Automotive Fund
, has compiled a collection of nearly 40 companies, representing both car manufactures and auto parts suppliers. Companies including Ford, Toyota,
TRW Automotive Holdings
are among the fund's largest positions.
With well over 1,000 products available, investors can typically turn to ETFs in order to satisfy nearly any portfolio need. However, as evidenced by the limited availability of adequately liquid automotive-focused products, there are still areas where this universe can expand.
Written by Don Dion in Williamstown, Mass.
At the time of publication, Dion Money Management held a position in the iShares Dow Jones U.S. Consumer Goods Index Fund.